Corrigendum to the Tariff Order dated 04.03.2015 of the ... · 1.2 The Durgapur Projects Limited...

West Bengal Electricity Regulatory Commission Corrigendum to the Tariff Order dated 04.03.2015 of the Commission including

the corrigendum dated 19.03.2015 in regard to the Tariff Application of the Durgapur Projects Limited (DPL) for the years

2014-2015 to 2016-2017 in Case No TP-55/13-14

Attention of the Commission has been drawn to a typographical error / apparent mistake

in the tariff order dated 04.03.2015 passed by the Commission including the

corrigendum dated 19.03.2015 in regard to the Tariff Application of the DPL for the years

2014-2015 to 2016-2017 in Case No: TP-55/13-14 .

The Commission is of the considered opinion that in the interest of all concerned such

typographical error / apparent mistake which do not have any effect on tariff

determination already made inadvertently in the said tariff order including the aforesaid

corrigendum, be corrected and necessary corrigendum be issued. The Commission

accordingly carries out such correction keeping in view the provisions of Section 94 of

the Electricity Act, 2003 and directs the Secretary to issue the following corrigendum :-

Correction of the typographical error / apparent mistake in the Tariff Order dated 04.03.2015 including corrigendum dated 19.03.2015 in respect of DPL.

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Page No Nomenclature Present Description Corrected Description

Power Factor (PF) Range in %

Power Factor (PF) Range

PF > 0.99% PF > 0.99 PF > 0.98% & PF < 0.99% PF > 0.98 & PF < 0.99 PF > 0.97% & PF < 0.98% PF > 0.97 & PF < 0.98 PF > 0.96% & PF < 0.97% PF > 0.96 & PF < 0.97 PF > 0.95% & PF < 0. 96% PF > 0.95 & PF < 0. 96 PF > 0.94% & PF < 0.95% PF > 0.94 & PF < 0.95 PF > 0.93% & PF < 0.94% PF > 0.93 & PF < 0.94 PF > 0.92% & PF < 0.93% PF > 0.92 & PF < 0.93 PF > 0.86% & PF < 0.92% PF > 0.86 & PF < 0.92 PF > 0.85% & PF < 0. 86% PF > 0.85 & PF < 0. 86 PF > 0.84% & PF < 0. 85% PF > 0.84 & PF < 0. 85 PF > 0.83% & PF < 0.84% PF > 0.83 & PF < 0.84 PF > 0.82% & PF < 0. 83% PF > 0.82 & PF < 0. 83 PF > 0.81% & PF < 0.82% PF > 0.81 & PF < 0.82 PF > 0.80% & PF < 0. 81% PF > 0.80 & PF < 0. 81

106

Some of the signs in first column with the column heading “Power Factor (PF) Range in %” of the Table “Power Factor Rebate & Surcharge on Energy Charge in Percentage” in the corrigendum.

PF < 0.80% PF < 0.80


126 From 6th line to 9th line in clause (i) under paragraph 8.5 of the tariff order.

Such calculation sheet shall also specifically mention the received fuel bill which has not been considered or partly considered in the said MVCA in pursuance to note (g) under sub- paragraph (e) of paragraph A of Schedule – 7B of the Tariff Regulations.

Such calculation sheet shall also specifically mention the received fuel bill and/or power purchase bill which has not been considered or partly considered in the said MVCA in pursuance to note (g) under sub- paragraph (e) of paragraph A of Schedule – 7B of the Tariff Regulations.

Sd/- (SUJIT DASGUPTA) MEMBER Dated: 25.05.2015

West Bengal Electricity Regulatory Commission Corrigendum to the Order dated 04.03.2015 of the Commission

in regard to the Tariff Application of the Durgapur Projects Limited (DPL), for the year 2014-2015 in Case No TP-55/13-14

Attention of the Commission has been drawn to a typographical error / apparent mistake

in the tariff order dated 04.03.2015 passed by the Commission in regard to the Tariff

Application of the DPL, for the year 2014-2015 in Case No: TP-55/13-14 .

The Commission is of the considered opinion that in the interest of all concerned such

typographical error / apparent mistake which do not have any effect on tariff

determination already made inadvertently in the said tariff order, be corrected and

necessary corrigendum be issued. The Commission accordingly carries out such

correction keeping in view the provisions of Section 94 of the Electricity Act, 2003 and

directs the Secretary to issue the following corrigendum :-

Correction of the typographical error / apparent mistake in the Tariff Order dated 04.03.2015 in respect of DPL.

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106

Some of the signs in first column with the column heading “Power Factor (PF) Range in %” of the Table “Power Factor Rebate & Surcharge on Energy Charge in Percentage” under sub-paragraph 7.3.7.1 are erroneously printed.



PF > 0.99 PF > 0.99%

PF > 0.98 & PF < 0.99 PF > 0.98% & PF < 0.99% PF > 0.97 & PF < 0.98 PF > 0.97% & PF < 0.98% PF > 0.96% & PF < 0.97% PF > 0.96% & PF < 0.97% PF > 0.95% & PF < 0. 96% PF > 0.95% & PF < 0. 96% PF > 0.94% & PF < 0.95% PF > 0.94% & PF < 0.95% PF > 0.93% & PF < 0.94% PF > 0.93% & PF < 0.94% PF > 0.92% & PF < 0.93% PF > 0.92% & PF < 0.93% PF > 0.86% & PF < 0.92% PF > 0.86% & PF < 0.92% PF > 0.85% & PF < 0. 86% PF > 0.85% & PF < 0. 86% PF > 0.84% & PF < 0. 85% PF > 0.84% & PF < 0. 85% PF > 0.83% & PF < 0.84% PF > 0.83% & PF < 0.84% PF > 0.82% & PF < 0. 83% PF > 0.82% & PF < 0. 83% PF > 0.81% & PF < 0.82% PF > 0.81% & PF < 0.82% PF > 0.80% & PF < 0. 81% PF > 0.80% & PF < 0. 81% PF < 0.80% PF < 0.80%

Sd/- (SUJIT DASGUPTA) MEMBER Dated: 19.03.2015

ORDER

OF THE

WEST BENGAL ELECTRICITY REGULATORY COMMISSION

FOR THE YEAR 2014 – 2015

IN

CASE NO: TP – 55 / 13 – 14

IN RE THE TARIFF APPLICATION OF

THE DURGAPUR PROJECTS LIMITED

FOR THE YEARS 2014-15, 2015-16 AND 2016-17

UNDER SECTION 64(3)(a) READ WITH SECTION

62(1) AND SECTION 62(3) OF THE

ELECTRICITY ACT, 2003

DATE: 04.03.2015

Tariff Order of DPL for the year 2014 – 2015

CHAPTER - 1 INTRODUCTION

West Bengal Electricity Regulatory Commission 2

1.1 The West Bengal Electricity Regulatory Commission (hereinafter referred to as

the “Commission”), a statutory body under the first proviso to section 82(1) of the

Electricity Act, 2003 (hereinafter referred to as the “Act”), has been authorized in

terms of the section 86 and section 62(1) of the Act to determine the tariff for a)

supply of electricity by a generating company to a distribution licensee, b)

transmission of electricity, c) wheeling of electricity and d) retail sale of electricity,

as the case may be, within the State of West Bengal.

1.2 The Durgapur Projects Limited (hereinafter referred to as DPL) was a sanction

holder under section 28 of the Indian Electricity Act, 1910 and has become a

deemed licensee in terms of the first proviso to section 14 of the Act with effect

from 10.06.2003 i.e. the date of coming into force of the Act, for distribution of

electricity in Durgapur area of West Bengal.

1.3 The Commission, in the past, passed tariff orders for DPL for fourteen years from

2000 – 2001 to 2013 – 2014 (both years inclusive) in ten orders, - three joint

orders covering the years (1) 2000 – 2001 and 2001 – 2002, (2) 2002 – 2003,

2003 – 2004 and 2004 – 2005 and (3) 2011-2012 and 2012-2013 and seven

single orders for the years 2005-2006, 2006-2007, 2007-08, 2008 – 2009, 2009

– 2010, 2010 – 2011 and 2013 – 2014. DPL felt aggrieved by the tariff order

dated 24.5.2004 determining its tariffs for the years 2000-2001 and 2001-2002

and filed a writ petition [W. P. No. 12108 (W) of 2004] and subsequent petition

bearing No. AST 1019 / 2004 in the Hon’ble High Court at Calcutta challenging

the order of the Commission dated 24.05.04. The matter lies pending before the

Hon’ble High Court at Calcutta for final disposal. DPL felt aggrieved by the order

of the Commission dated 9.6.2004 also and moved the Hon’ble High Court at

Calcutta in an appeal against the said tariff order [No. AST 1134 of 2004 and WP

No. 14128 (W) of 2004]. The Hon’ble High Court was pleased, by an order dated

15 July 2004, to stay the operation of one part of the tariff order of the



Commission dated 9.6.2004 involving a question of refund to the consumers of

DPL while the rest of the tariff order was not interfered with. This matter is still

sub-judice before the Hon’ble High Court at Calcutta.

1.4 West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff)

Regulations, 2011 has come into effect with effect from 29th April, 2011. The said

Tariff Regulations, 2011 was further amended by notifying the West Bengal

Electricity Regulatory Commission (Terms and Conditions of Tariff) (Amendment)

Regulations, 2012 in the extra ordinary edition of The Kolkata Gazette dated 27th

August, 2012 and was further amended by notification in The Kolkata Gazette

dated 30th

1.5 In terms of West Bengal Electricity Regulatory Commission (Terms and

Conditions of Tariff) Regulations, 2011, as amended from time to time

(hereinafter referred to as the ‘Tariff Regulations’), the tariff applications for the

fourth control period consisting of the years 2014 – 2015, 2015 – 2016 and 2016

– 2017 under the Multi Year Tariff (MYT) framework was required to be

submitted by DPL 120 days in advance of the effective date of the said control

period. The effective date of the fourth control period is 1

July, 2013..

st April, 2014. DPL

submitted an application on 25.11.2013 for extension of date for submission of

their MYT application for the forth control period upto 31.12.2013 on the plea that

the Amendment Regulations, 2013 contain many changes for generating station

and they had to study those amendments and to work out impact of such

changes which required some time. The Commission, after considering the

application of DPL and also the applications received from some distribution

licensees and the transmission licensee for extension of time of submission of

MYT application, decided to fix the last date of submission of MYT application for

the fourth control period on 31.12.2013 and accordingly issued an order dated

02.12.2013.



1.6 DPL submitted their application for MYT for fourth control period on 30.12.2013

in an incomplete status. After a series of correspondence, DPL, however,

submitted the requisite forms / documents on 06.03.2014. The petition was

admitted by the Commission and numbered as TP-55/13-14.

1.7 After admission of the application DPL was directed to publish, the gist of the

application, as approved by the Commission, in the newspapers and also in their

website, as specified in the Tariff Regulations. The gist was, accordingly,

published simultaneously on 11.04.2014 in Economic Times, Ekdin, Bartaman

and Sanmarg. The publication invited the attention of all interested parties, stake

holders and the members of the public to the application for determination of tariff

of DPL for the fourth control period and requested for submission of objections,

comments etc., if any, on the tariff application to the Commission by 16.05.2014

at the latest. In order to invite more suggestions / objections from the stake

holders, interested parties and members of public, the Commission extended the

date of submission upto 25.05.2014. Opportunities were also afforded to all to

inspect the tariff application and take copies thereof.

1.8 The suggestions, objections and comments on the aforementioned application of

DPL for determination of tariff for the fourth control period were received only

from the following stake holders within the specified time limit and the same have

been recorded in a summarized form in Chapter 3 of the instant order.

a) M/s Shyam Ferro Alloys Limited.

b) M/s Bamunara Industries Welfare Association

1.9 The petitioner, DPL, while submitting its application for determination of tariff,

also sought for review of the norms specified by the Commission in the Tariff

Regulations. We may put it on record that the aforesaid Tariff Regulations were

finalized through previous publication. Having received suggestions, objections



and comments the Commission in exercise of its delegated legislative power duly

considered the matter in detail and framed such regulations and the regulations

were notified in the Kolkata Gazette. DPL should not have sought for review

which is practically seeking amendment to the tariff regulations. In tariff

determination proceedings once the regulations are framed by the Commission,

there is no scope to review or challenge such statutory norms in tariff

determination proceedings. Accordingly, the prayer for review seeking

modification to the statutory norms in the Tariff Regulations is not considered.

Thus, such issue will not be dealt in subsequent chapter further.

1.10 The Commission determines the tariff in accordance with the Electricity Act, 2003

and the Tariff Regulations framed thereunder and for this purpose, the

Commission has estimated the expenditure for 2013 – 2014 to arrive at the

estimated expenditure / cost under different heads for the years 2014 – 2015 to

2016 – 2017.

1.11 The estimation made for 2013 – 2014 by the Commission shall not be construed

by DPL as admission of at least such estimated amount in APR for 2013 – 2014.

On the other hand, if in APR any deduction is made then as a conclusion from

such decision one shall not expect that the impact of such deduction is to be

continued in fourth control period as this will tantamount to imposing a penalty of

infinite nature or double penalty for the same inefficiency.


CHAPTER - 2 THE CASE OF DPL


2.1 DPL has submitted the application containing its proposal for determination of

Annual Revenue Requirement (ARR) and tariff for the fourth control period,

covering the years 2014 – 2015 to 2016 – 2017, in accordance with the Tariff

Regulations. The tariff applicant has proposed the ARR and tariff for each year of

the fourth control period and has prayed for allowing the same. The licensee has

also prayed for other dispensations which are mentioned in subsequent

paragraphs.

2.2 DPL has stated that while proposing tariff for various categories of consumers,

they have followed the principles laid down in the Tariff Regulations, attempted to

reduce cross-subsidies and rationalize the tariff for various classes of consumers

and have also proposed gradual reduction of T&D losses.

2.3 According to DPL, the total cost of its power plant operations has increased

substantially during the current year and the same is expected to increase further

in the three years of the fourth control period. In submitting figures showing

revenue requirement and recoverable revenue from sale of power at existing

tariff, DPL has shown that there will be gap of Rs. 53144.70 lakh during 2014 –

2015, Rs. 64076.26 lakh during 2015 – 2016 and Rs. 75800.75 lakh during 2016

– 2017. DPL has, therefore, submitted that these gaps are needed to be covered

by increase in tariff and if the existing tariff is not increased for the fourth control

period, DPL’s financial position will be worsen impacting on its ability to serve its

consumers.

2.4 To justify the need for tariff increase, DPL has furnished figures under different

heads of actual expenditure of previous years from 2009 – 2010 to 2012 – 2013

and proposed expenditure for the ensuing years of the fourth control period i.e.

for 2014 – 2015, 2015 – 2016 and 2016 – 2017. Taking into consideration the

normative depreciation, normative return and non-tariff income, DPL has also



calculated and furnished the figures for ARR for each ensuing year of the fourth

control period and also the revenue recoverable through tariff during 2014 –

2015. Based on figures of sale of power DPL has proposed average tariff of

525.32 paise / kWh for 2014 – 2015, 538.83 paise / kWh for 2015 – 2016 and

566.99 paise / kWh for 2016 – 2017.

2.5 The Units III, IV & V (77 MW each) have been proposed for decommissioning

and no projection for generation has been made from these three units from

2014 – 2015 onwards. DPL has now two units in its power station with a total

capacity of 410 MW as against earlier four units with capacity of 641 MW. The

unit VI has a capacity of 110 MW and the 7th unit is having capacity of 300 MW.

DPL had taken up the construction of its 8th Unit for a capacity of 250 MW which

is projected to be commissioned on 01.07.2014 as per their submission. DPL,

however, submitted their application for prior approval of the Commission for

synchronization of unit VIII in terms of regulation 6.15.2 of the Tariff Regulations

only on 11.07.2014 order on which, have been passed by the Commission on

25.07.2014 giving go-ahead clearance for synchronization of the new 250 MW

unit no. VIII on or after 26.07.2014. DPL vide their letter no. MD/DPL/F-

148/2014/2400 dated 11.10.2014 have communicated that after successful

completion of trial run operation of 1 x 250 MW unit no. VIII, commercial

operation for the said unit has been declared from 00.00 hrs. of 01.10.2014.

Both the copies of the order dated 25.07.2014 and the letter dated 11.10.2014 of

DPL have been posted in the website of the Commission. Considering the fact,

the Commission decides to consider the COD as 01.10.2014 and all

components of generation, sales and cost have been determined accordingly.

DPL has proposed Plant Load Factor (PLF) for its old unit VI (110 MW) at 60%

in lieu of normative 64% for the year 2014 – 2015,2015-16 and 2016 – 2017 and

that for Unit VII and Unit VIII at 80% as per the norms specified in the Tariff

Regulations. Since, however, such high PLF could never be achieved in the past

from this old unit, DPL has submitted to review the fixation of PLF for Unit VI.



Based on normative PLF, DPL has projected gross generation of power of the

order of 3995.76 MU during the year 2014 – 2015 and 4432.56 MU during each

of the two years 2015 – 2016 and 2016 – 2017.

2.6 The total sale of power of the licensee will be of the order of 3645.05 MU during

2014 – 2015, 4052.83 MU during 2015 – 2016 and 4052.83 MU during 2016 –

2017. The sales have been estimated based on the expected increase in

number of consumers and also increase in contract demand of the existing

consumers of DPL. DPL has shown the consumer category wise proposed

sales for each year of the fourth control period.

2.7 Though the generation of DPL is normally sufficient to meet the local demand

and allows it to sell the surplus power to WBSEDCL. In case of emergency or

whenever own generation of DPL is inadequate, power is sourced from

WBSEDCL to meet the local demand. DPL has proposed sale of power to

WBSEDCL and others of the order of 1177.860 MU during 2014 – 2015,

1112.420 MU during 2015 – 2016 and 1112.420 MU during 2016 – 2017. DPL

currently does not sell / purchase power to / from any other utility apart from

WBSEDCL.

2.8 The tariff applicant will purchase power from non-conventional sources of

energy as per the guidelines of the Commission depending on availability of the

same from M/s. Corporate Ispat and M/s Solitaire Industrial Infrastructure Pvt.

Ltd.

2.9 DPL has proposed to maintain its T & D losses at 5.20% for each of all the

three years under fourth control period despite increased technical losses due

to increase in system loading and extension of T & D net work. DPL has

undertaken several measures for reduction of T & D losses. Such measures

include augmentation and renovation of T&D system, replacement of single



phase and three phase electro mechanical meters by static meters, wide use of

plastic anti tamper & security seals, replacement of CTs of consumers, as

required, for recording energy accurately, surprise checking and regular raids to

curb theft of power etc.

2.10 The station heat rates as proposed by the licensee are as per norms specified

in the Tariff Regulations. As per norms, the heat rate of the old unit VI of DPL’s

power station is 3100 Kcal / kWh for all three years of the fourth control period

and the same for its new Units VII & VIII is 2345 Kcal / kWh for each year of the

fourth control period. Since, however, the average heat rate of the old unit VI is

around 3418 Kcal / kWh for various reasons like smaller size, vintage, non-

availability of H.P. heaters, presence of foreign materials in coal, boiler without

re-heater etc., DPL has submitted to allow the heat rate of 3418 Kcal / kWh for

unit VI.

2.11 DPL has proposed the average landed cost of coal considering the average

hike of 10% in coal price over the actual average coal price for 2012 – 2013.

2.12 The proposed transit and handling losses of coal are as per norm specified in

the Tariff Regulations. DPL, however, is of the opinion that it will not be able to

maintain such too low rate of transit and handling losses for various reasons

and since in reality the transit and handling losses are of the order 2% to 3%.

2.13 The proposed specific oil consumption rates are as specified for the units of

DPL in the Tariff Regulations.

2.14 The generating station of DPL had five existing units comprising 3X77 MW +

1x110 MW and a new unit of 1X300 MW. Another unit of 1X250 MW (Unit VIII)

was scheduled to be commissioned on 01.07.2014 as per submission of DPL.

DPL, however, have declared the COD of 1x250 MW unit no. VIII from 00.00



hrs of 01.10.2014 as already mentioned in paragraph 2.5 in this chapter and

the Commission considers the same for the purpose of tariff determination. DPL has proposed for decommissioning of Units III, IV & V (3X77 MW) with

effect from the beginning of the financial year of 2014 – 2015. It has submitted

that necessary process for decommissioning of the above three units has

already been taken up with the appropriate authority. DPL, therefore, is

presently operating with only two units i.e., units VI & VII (1X110 MW + 1X300

MW). Employees engaged in the concerned three units will be redeployed in

the above said existing two units and also in the forthcoming unit VIII. As per

Man / MW ratio of unit VIII, the number of employees comes to 300. In the

financial year 2014 – 2015, DPL projected fresh induction of 50% of

recommended employees against unit VIII and the rest 50% will be dealt

suitably with assessment of employees’ strength and agronomics thereon or for

further fresh induction after the decommissioning of the aforesaid units.

However, DPL projected employee cost against unit VIII as per existing

average salary for the ensuing years based on 150 employees.

2.15 Regarding expenses on Operation & Maintenance (O&M), DPL has stated that

they have proposed expenditure on this head of account as per norm specified

in the Tariff Regulations and proposed expenses for the years are as below:

• Rs. 11237.36 lakh for 2014 – 2015;

• Rs. 12578.47 lakh for 2015 – 2016;

• Rs. 13504.13 lakh for 2016 – 2017.

The reasons for such huge expenditure as stated by DPL are –

• frequent tube leakage for poor grade of coal,

• high up-keeping expenses for the old units,

• sixth unit was commissioned in the year 1985 and frequent outage invites

high maintenance expenses,



• the normative expenditure is for generation only and does not include

expenses for T & D wing,

• almost no inflation factor has been considered for fixing the norm. Current

inflation rate is around 9%.

In this regard, the Commission states that the contention of DPL that no

inflation is considered in fixing the norms is not correct. During norms

fixation, all the above aspects have been considered on the basis of

suggestions and objections of the stakeholders.

2.16 DPL has also prayed for allowing projected coal and ash handling charges and

water charges over and above the O&M expenses since these are not part of

the O&M expenditure in terms of the Tariff Regulations.

2.17 The licensee has doubtful debt of the order of Rs.89.07 crore of which certain

amount is almost not possible to be recovered since these dues are from sick

companies which are either referred to BIFR or closed or under liquidation. DPL

has, therefore, prayed to allow some more amounts in addition to normative

amount under this head of account.

2.18 DPL has proposed its other fixed costs for each ensuing year of the fourth

control period and adduced justifications for increase, wherever required.

2.19 DPL has stated that it has made every effort to meet the information

requirements as specified by the Commission. DPL has requested the

Commission to look at any omission or shortcoming sympathetically, in case

there is any gap in data submission. DPL agrees to make available all such

data as the Commission may require notwithstanding any waiver given by the

Commission, it has been stated.



2.20 DPL has requested the Commission to (1) accept the Aggregate Revenue

Required and the Tariff Proposal for the fourth control period covering the years

2014 – 2015 to 2016 – 2017 and (2) pass orders as the Commission may deem

fit and proper keeping in view the facts and circumstances of the case.


CHAPTER - 3 Objections, Suggestions Etc.


3.1 Shyam Ferro Alloys Limited and Bamunara Industries Welfare Association

have submitted their objections, suggestions and comments on the MYT

application of DPL for the fourth control period within the scheduled date i.e.

25.05.2014. The main points of the objections, suggestions and comments

are summarized in subsequent paragraphs. The Commission’s observations

on some of the objections, suggestions and comments are also recorded in

this chapter.

3.2 Objections, suggestions and comments of Shyam Ferro Alloys Limited

3.2.1 Shyam Ferro Alloys Limited (SFAL) in their objections at first submits the

background of DPL and its consumers and the impact of proposed tariff if

implemented. They submit that from the figure indicated in the application

and other available documents, annual accounts etc., it appears that lower

utilization of generating units and other infrastructures, excessive cost on

fuel, O&M expenses and financial charges have resulted in increase in cost.

The Commission have noted the comments of SFAL and dealt with the same

while determining the cost under different heads in subsequent chapters.

3.2.1.1 SFAL says that power generated by DPL is supplied to its consumers in

Durgapur out of which about 90% constitute bulk industrial consumers. DPL

supplies power in an area covering a very small segment of say around 100

square kilo meters. Hence, from both consumer mix and distribution network

point of view, DPL enjoys substantial benefit compared to other distribution

licensees. Hence, the maximum ATC loss of 5.5% allowed to DPL by the

Hon’ble Commission is claimed by DPL for tariff. But the loss is incurred by

DPL mainly for about 10% of the power sold. If the said loss is properly

analyzed, it may be seen that the said loss for LT sector of consumer is either



substantially more or the said loss claimed to be actual may be inflated. This

is an area we believe reduction of tariff by a few paise exist.

This Commission has noted the point and dealt with in the subsequent

chapter for determination of energy balance as per the Tariff Regulations.

3.2.2 SFAL in their summarized objections have also stated, inter-alia, the following

item wise objections for consideration of the Commission:

3.2.2.1 Manpower allowed by Regulation and considered by DPL in MYT:

The Regulation provides the Man/MW ratio for DPL presuming combination

of different units in the following manner:

Unit No. Installed Capacity Man/MW Ratio 3, 4, 5 & 6 3x77+1x110 MW 3.5

3, 4, 5, 6 & 7 3x77+1x110+1x300 MW 2.42 3, 4, 5, 6, 7 & 8 3x77+1x110+1x300+1x250 MW 2.08

7 & 8 1X300+1X250 MW 1.20

DPL in its MYT application has indicated generation from Units 6, 7 & 8 only.

No generation from Unit 3, 4 & 5 has been considered. There is no Man/MW

ratio prescribed for Units 6, 7 & 8 only. Since the same for Units 3, 4, 5, 6, 7

& 8 have been stated as 2.08 men per MW and that for 3, 4, 5 & 6 is 3.5 men

per MW, the Man/MW ratio for Units 6, 7 & 8 only should in our opinion be

less than 1.5 men per MW. In that case the Man power for the power station

of DPL should be less than 990 persons.

The Commission has noted the above points but will follow the employee

cost determination by following Tariff Regulations and specifically paragraph

(xii) and (xv) of the note under Schedule – 9A of the Tariff Regulations.



3.2.2.2 Escalation in Wages and Salary :

It has been a practice to claim ad-hoc escalation in expenditure on account of

salary. As we know, the Pay structure of DPL is similar to that of other state

owned power utilities. The pay scales are revised usually once in every 10

years. Since no such revision is due during the intervening period, the

escalation should remain limited to annual increment and increased DA. But

on the other hand there should be reduction in employees cost due to

reduction in work force on account of superannuation. Since, the average

gross remuneration of outgoing employees is substantially more than new

recruits, if any, the net impact should be nominal. But DPL has claimed a

very high rate of escalation for DA. While the increase in Basic Pay is from

Rs. 2607.18 lakh in 2013-14 to Rs. 2932.67 lakh in 2016-17, said increase in

case of DA is from Rs. 2392.79 lakh in 2013-14 to 3630.14 lakh in 2016-17

which in our opinion much more than the rate of inflation relevant index.

Similar escalation has been claimed for elements of employees cost also. No

consideration for reduced man power requirement with proposed mix of units

available for generation, as mentioned in previous Para, has been made.

Hence the amount claimed on this account may kindly be examined with

regard to escalation claimed.

The Commission has noted the above point.

3.2.2.3 Ash Handling Expenses :

DPL has its main generating units, whose generation has been projected in

MYT, are new and larger units. As we know, these units have adopted Dry

Ash disposal technology involving additional project cost associated with

O&M expenses and involvement of interest and depreciation. But, as it is

known to us DPL has a limited quantum of dry ash for disposal and as a

result expenditure incurred on this account appeared to be more than what it



should have been and thus the inefficiency or avoidable expenditure is

passed on to consumers.

The Commission has noted the above points;

3.2.2.4 Sub stations with under-utilized capacity :

DPL has expanded its distribution network investing a substantial amount

and as per petition it has borrowed money for the investment made for

construction of the sub-stations. Clause 2.3.9 of the MYT provides that there

are five 132/11 KV Grid sub-stations, 1 No. 132/33 KV sub-station and one

no. 33/11 KV sub-station. But the sale of power to local consumers does not

indicate that the investment is giving return out of increase in sale of power.

Hence, the consumers are compelled to bear the cost of idle investment.

The point raised is an issue related to the stage of investment approval for

which objections and suggestions had already been invited and investment

approval was accorded by the Commission.

3.2.2.5 Purchase of power from non-conventional sources :

In clause 2.3.7 of the MYT it has been stated that DPL has agreed to

purchase power from non-conventional sources at a high price. The weighted

average impact of such high rate for non-conventional power has an adverse

impact when the actual generation goes down. As the projected generation

and actual generation of DPL varies very widely almost every year, the

consumers may have to pay more which the Hon’ble Commission may kindly

see.

Purchase of power from non-conventional energy sources is done as per

obligation of National Tariff Policy and such purchase is as per procedure of



the concerned Regulations of the Commission. Considering larger aspects of

promotion of renewable energy, the objection cannot be considered.

3.2.2.6 Own consumption of Power :

The clause 2.3.7 of the MYT provides that own consumption of power shall

be 15 MU in a year. This is apart from the auxiliary consumption of power

and consumption of other Plant which the applicant has stated as Inter Plant

Transfer. The reasonability of the quantum of own consumption may kindly

be looked into.

The point has been noted. The own consumption as projected by DPL at

15.00 MU for each ensuing years are the consumption which are used for

administrative buildings, guest houses, hospitals, sub-stations and switch

yard lighting etc. Consumption at other plants of DPL are considered as

interplant transfer and treated as sale of energy at the rate specified in the

tariff structure and the cost is borne by the other business of DPL.

3.2.2.7 Reduction in O&M Cost for new Unit :

The 250 MW Unit No. 8, generation of which has been considered for part of

the year 2014-15 and thereafter, is a new Unit. The Unit should have

warranty period for replacement of damaged parts. The old Units 3, 4, 5 have

not been considered for projecting generation. Therefore, the expenditure on

account of Repair & Maintenance should be much less than previous years.

The Hon’ble Commission may kindly look into this aspect while determining

tariff based on the proposed MYT.

The norms set for O&M expenses for generating units specified under the

Tariff Regulations itself take care of the issue raised by the objector.



3.2.2.8 Interest on working capital :

It appears from the Annual Accounts of DPL that it maintains a good amount

outstanding to its creditors. On the other hand its loan for working capital and

interest implications are increasing. It had often been heard that DPL had to

restrict supply of power due to low generation for want of coal. Hence, the

reasonability of the claim on this account may be examined please.

The point is noted. The apprehension of the objector has no merit as working

capital requirement is restricted through norms.

3.2.2.9 Water Consumption :

Water consumption expense is a major item of expenditure claimed by DPL.

There is substantial increase in rate of water which is a captive plant of DPL.

The quantum of consumption of water in future years should also reduce due

to commissioning of new plants with new technologies. We would accordingly

draw the attention of the Commission on this point so that the interests of the

Consumers are protected.

The point is noted.

3.2.3 Discrepancy in Tariff Rationalization:

3.2.3.1 SFAL has referred the provision of the section 61 and 62(3) of the Act on the

issue of Tariff Rationalization. SFAL have also submitted that the increase

solicited by DPL in their petition is ranging from about 10% to 19% in three

years inspite of elimination on un-economic old small size units and addition

of new efficient large size units having the benefits of low heat rate of the

units, less fuel consumption, low man-megawatt ratio, less R&M expenses in

initial year. SFAL have also compared the hike in average tariff in percentage

of the utilities under this Commission during last two years and pray to the



Commission to due diligently verify the need for tariff increase and to set the

industrial tariff as per provisions of the Act.

SFAL have also objected the proposed rate of demand charge comparing the

same with the rate approved in the tariff orders for 2012 – 2013 in some of

the other States.

SFAL have also proposed for introduction of load factor rebate in percentage

instead of absolute term in paise / kWh prevailing at present. They also

propose to consider for bringing a parity in the LF rebate with other utilities in

the State. SFAL have also proposed for introduction of timely payment rebate

for two folds effect, namely, make consumer interested in timely payment and

getting payment early by DPL which in turn reduce the impact of interest on

working capital.

SFAL have also suggested to look in to the tariff application of DPL in line

with the relevant Regulations with least possible differential effect on account

of arrear so that no consumer is required to pay large amount of arrears at a

subsequent date.

The Commission has noted all the above points raised by the objector. The

Commission will decide on all the issues as per provisions of the Act and

Regulations made thereunder while determining the cost under different

heads and tariff of DPL in subsequent chapters.

3.3 Objections of Bamunara Industries Welfare Association:

3.3.1 Bamunara Industries Welfare Association (BIWA), has stated, inter alia, the

following points for consideration of the Commission:



3.3.1.1 Fuel Cost :

The major objections in respect of proposed fuel cost are listed in the matrix

below:

• No documentary evidence in the form of fuel invoices for the said month

i.e., October 2013 have been enclosed with the MYT Petition, without

which, prudence check is not possible.

• The weighted average coal prices in 2013-14 (Rs. 2,478.08/Ton) are

exactly 10% higher than the coal prices in FY 2012-13 (Rs. 2,252.80/Ton).

• Similarly, in case of oil, the prices in 2013-14 (Rs. 56,511.99/KL) are

exactly 10% higher than the oil prices in FY 2012-13 (Rs. 51,374.54/KL)

• Presumably, the prices in FY 2013-14 have been simply projected to be

10% higher over previous year without any reference to actual fuel invoices

as purportedly by DPL.

• A strict prudence check is required by the Hon’ble Commission and the

copies of the fuel invoices for FY 2013-14 should be placed before the

Objector as well to reassure the Objector and general public at large of

fairness in determination of energy charges.

• As per the terms of the Tariff Regulations, no escalation in fuel prices has

to be considered while projecting the tariff for the ensuing years as the

variation in the fuel prices are to be covered through the mechanism of

Monthly Variable Cost Adjustment (MVCA).

• This was reaffirmed by the Hon’ble Commission in the Tariff Order for FY

2011-12 and 2012-13 dated 17.12.2012, wherein it has disallowed the hike

projected by the DPL in the fuel prices.



The points are noted. The Tariff Regulations have never restricted in giving

escalation in price of fuel from year to year. In such case MVCA will be

computed accordingly. The Commission will consider the present notified

price of coal of CIL vide notification No. CIL:S&M:GM(S&M):Pricing:234

dated 27.05.2013 effective from 28.05.2013, while determining the fuel cost

in accordance with the provisions of the Tariff Regulations.

3.3.1.2 Relaxation in norms of Plant Load Factor (PLF), Station Heat Rate (SHR),

Secondary Fuel Oil consumption, Transit loss etc.

The Tariff Regulations prescribe the norms for all the operating parameters

viz., PLF, SHR, secondary fuel oil consumption and transit loss etc. for each

generating station. DPL have requested for relaxation in norms presumably

considering the age and rating of unit VI. The objector’s view is that there are

many generating stations in the country with similar age / rating which are

operating at much better efficiency. In this context they have given the

example of Badapur TPS, Tand TPS, Panipath TPS, GND TPS (Bhatinda),

Ukai TPS, Korba TPS, Sabarmali TPS, Kothaguden TPS, Talcher (old) TPS,

Jojober TPS. In their opinion operational norms prescribed in Tariff

Regulations for unit VI are significantly lower than the industry benchmark

and any further relaxation would be detrimental to the interest of the

consumer and would tantamount to rewarding the inefficiencies of DPL.

The Commission has noted the points stated by the objector and finds no

reason to consider the prayer of DPL as explained in paragraph 1.9 of this

order and considers the operating norms as specified in the Tariff

Regulations while determining the fuel cost in subsequent chapter, as the

Tariff Regulations are finalized after inviting suggestions and objections.



3.3.1.3 Power Purchase :

DPL should have avoided the short term power purchase from WBSEDCL

which was done at around Rs. 5.06/kWh in FY 2012-13 when power was

available on the exchange at half the price at around Rs. 2.88/ kWh.

Considering the above, it is humbly prayed that exorbitant and unnecessary

short term power purchase should be disallowed. Further, it is understood,

that subsequent to commissioning of the unit VIII, DPL would not require any

short term purchases. In case there is any short term requirement, then DPL

should purchase cost effective power from exchanges rather than purchase

of costly power from WBSEDCL.

In the light of the above submissions, it is humbly prayed that the short term

power purchase be disallowed in the MYT order. In the unlikely case of short

term power purchase in the fourth control period, the same can be allowed

based on actuals through the FPPCA, MVCA and APR mechanisms.

The Commission agrees with the objector’s view. DPL shall procure short-

term requirement of power from the sources wherever it is cheaper.

3.3.1.4 Employee Cost:

Bamunara Industries Welfare Association objects the following in regard to

employee cost.

• The employee costs are allowable only up to the recommended Man/MW

ratio. Based on the objector’s assessment, the employee expenses of

1345 employees only are admissible.



• The proportionate cost of centralized service department and central

workshop may be capped at 8.33% of the employee costs directly

attributable to generation function and 10% of the distribution function.

• Proposal for inclusion of employee expenses of new recruitments are not

admissible as DPL has already breached the recommended Man/MW

ratio.

• Notwithstanding the above, new recruitments (thereby replacing

superannuated employees) would optimize the employee costs rather

than increase it.

The Commission has already provided its view in the same context in

paragraph 3.2.2.1.

3.3.1.5 Operation and Maintenance Expenses:

DPL has claimed repair and maintenance expenses, other administrative and

general expenses, rent, rates and taxes and audit fees under the head

Operation and Maintenance (O&M) expenses. According to BIWA, DPL have

claimed Rs. 11237.04 lakh in financial year 2014 – 2015 which is an increase

of around 18.25% over the value submitted for financial year 2013 – 2014

and the increase claimed for financial year 2015 – 2016 and 2016 – 2017 is

around 11.94% and 7.36% respectively for which DPL have not assigned any

reason for such exorbitant expenditure. The objector’s view is that in the tariff

order for financial year 2011 – 2012 and 2012 – 2013 dated 17.12.2012, the

Commission had allowed a year-on-year increase of 5% during the third

control period and the operation and maintenance expenses during the fourth

control period be allowed by the Commission to DPL considering a year-on-

year increase of 5% over the financial year 2013 – 2014 level.



The Commission has noted the suggestion of BIWA and give their views

while determining the (O&M) expenses in subsequent chapter.

3.3.1.6 Coal and Ash Handling Expenses:

The DPL has claimed Rs. 1,826.30 Lakh, Rs. 2,108.86 lakh and Rs. 2,214.31

lakh for FY 2014-15, 2015-16 and 2016-17 respectively towards coal and ash

handling expenses.

Such amounts are significantly higher than the amounts admitted in the APR

Order for FY 2011-12 dated 09.09.2013 and the amounts incurred by the

DPL in FY 2012-13 as per audited accounts.

In the earlier Tariff Orders, the Hon’ble Commission had approved coal and

ash handling expenses based on the amounts proposed by the DPL and

considering normative generation levels. But in the APR orders, such

expenses were significantly scaled downwards as actual generation was

significantly below the normative levels.

Approving higher amounts in a Tariff Order and subsequently scaling it

downwards in the APR, leads to artificial tariff hike and front loading of tariff.

It is humbly prayed that the coal and ash handling expenses be allowed

considering actual generation in historical years and not normative

generation as in the past, DPL has never been able to achieve normative

generation levels.

The Commission will decide the tariff on normative basis and in case DPL

fails to maintain norm then required recovery is done through APR which is

used to reduce the tariff of subsequent year. This cyclic process

automatically keeps the tariff under control and the question of inflation does

not arise.



3.3.1.7 Water Charges:

The DPL has claimed Rs. 6,101.56 lakh in FY 2014-15 and Rs. 6,724.00 lakh

in FY 2015-16 and 2016-17 respectively towards water charges.

It is humbly prayed that the water charges be allowed considering actual

generation in historical years and not normative generation as in the past,

DPL has never been above to achieve normative generation levels.

The Commission will decide the tariff on normative basis and in case DPL

fails to maintain norm then required recovery is done through APR which is

used to reduce the tariff of subsequent year. This cyclic process

automatically keeps the tariff under control and the question of inflation does

not arise.

3.3.1.8 Interest on Borrowed Capital and Advance against Depreciation:

BIWA has stated in their submission that in the APR order for FY 2009-10

there was no loan balance attributable to PFC Loan No. 50403001. However,

the APR Order for 2010-11 depicted an opening balance of Rs. 3,544.37 lakh

attributable to PFC Loan No. 50403001. It is further stated that there were no

loan additions and no loan repayments in the said loan in the FY 2010-11 and

hence, the closing loan balance was depicted as Rs. 3,544.37 lakh.

Subsequently, the APR Order for 2011-12 depicted an opening balance of

Rs. 8,891.53 lakh. There is no explanation in the APR Order dated

09.09.2013 as to how the closing balance and the opening balance contained

a difference of Rs. 5,347.16 lakh, when there were no loan additions in FY

2011-12.

Further, in the APR Petition for FY 2012-13, nil (Zero) opening balance has

been provided on PFC Loan No. 50403001. However, in the APR Petition for



FY 2012-13, the DPL has claimed Rs. 1,553.63 lakh towards such loan, even

though there are no loan balances attributable to such loan.

Subsequently, in the MYT Petition, in the year 2014-15, there is an opening

balance of Rs. 12,499.41 lakh.

The Objector states that the capex-wise identification of the loan has not

been done by the DPL in the APR & MYT Petitions and pray that the

Commission may conduct a strict prudence check towards matching of loan

balances since the first tariff order for DPL and provide a detailed chart in the

MYT Order so that the Objector and consumers at large are reassured of

fairness in allowing amounts towards interest on borrowed capital.

The objector has illustrated the excessive claim towards interest on borrowed

capital which had been allowed in the past orders and the same have direct

implication on the allowable advance against depreciation. The objector prays

that the Commission may provide a detailed chart since inception i.e., first

tariff order of DPL indicating thereby the capex wise identification of the

loans, interest on borrowed capital, depreciation and advance against

depreciation computation.

The objections of Bamunara Industries Welfare Association in regard to

interest on borrowed capital are summarized below:

• Expenses towards interest on PFC loans be allowed after a strict

prudence check and after matching the loan balance w.r.t. past years.

• The Hon’ble Commission may provide a chart mapping the loans with

the capex schemes since the first tariff order for DPL and provide a

detailed chart in the MYT order so that the objector and consumers at

large are reassured of fairness in allowing amounts towards interest

on borrowed capital.



• Disallow the interest on GoWB loan and CEA loan as they are

enjoying perpetual moratorium.

As pointed out by M/s Bamunara Industries Welfare Association, the

Commission has examined the loan balances of different years starting from

2009 – 2010 with reference to actual audited accounts of DPL. The opening

balance of PFC loan no. 50433001 of the year 2013-14 as submitted by DPL

in their MYT petition is found to be correct. The actual status is given in the

table below. For details, Form – C to Annexure – 1 submitted by DPL with the

MYT application may be referred to. The point raises is an issue related to

the stage of investment approval for which objections and suggestions had

already been invited and after considering the same, if any, investment

approval was accorded by the Commission.

PFC Loan No. 50403001

Year Opening balance

Fresh drawal Repayment

Closing balance

2008-09 0 4213.01 0 4213.01 2009-10 4213.01 2772.68 0 6985.69 2010-11 6985.69 1905.84 0 8891.53 2011-12 8891.53 4078.82 378.51 12591.84 2012-13 12591.84 1861.74 954.22 13499.36

3.3.1.9 Income Tax:

BIWA has submitted that the power business of DPL is not a separate

business entity for the assessment of income tax. Its tax liability would

depend on the overall taxable income of the company as a whole and the

Tariff Regulations provide only for reimbursement of income tax which is

actually paid and upon production of documentary evidence and thus no

amount towards income tax is allowable based on projection.



The Commission has noted the points and dealt with in subsequent chapter

appropriately.

3.3.1.10 Demurrage:

BIWA has submitted that DPL has not advanced any reason for the need of

demurrage charges, nor has it submitted any document in support of the

claim. In terms of regulation 5.8.1(vi) of the Tariff Regulations, the demurrage

charge of a railway rake is an indicator of efficiency of rake unloading

capability of the generation station.

There was a specific direction issued to DPL by the Hon’ble Commission in

the APR order for FY 2011 – 2012, dated 09.09.2013, that from FY 2012 –

2013 onwards, the DPL should include the expenditure on account of

demurrage in fuel related costs in terms of regulation 5.8.1 (vi) of the Tariff

Regulations. Therefore, BIWAI feel that based on the Commission’s directive,

demurrage expenses are not permissible to be claimed separately and are to

be included as part of fuel related costs.

The Commission is of the opinion that demurrage charge is not a normal

business process and cannot be assessed in tariff determination stage. It is

applicable at the stage of FPPCA determination.

3.3.1.11 Development Fund:

The Objector submits that the DPL has neither mentioned the purpose of

such fund for a particular function nor have they segregated it function wise.

DPL has also not mentioned whether they will be able to comply with all the

provisions of the Regulations to maintain such fund. It is humbly prayed that

no amount under the head ‘development fund’ may be allowed in the MYT

order.



The Commission has noted the points and dealt with in subsequent chapter

appropriately.

3.3.1.12 Income from other sources / Non Tariff Income:

BIWA submits that DPL has projected Rs. 816.84 lakh, Rs. 825.60 lakh and

Rs. 833.14 lakh during the year 2014 – 2015, 2015 – 2016 and 2016 – 2017

respectively towards non-tariff income. The year-on-year increase in non-tariff

income over the control period has been considered at a meager rate of 1%.

A close scrutiny of the audited accounts reveals that the actual incomes from

other sources / non-tariff income of DPL have been to the tune of Rs.

1037.47 lakh and Rs. 1768.46 lakh for FY 2011 – 2012 and 2012 – 2013

respectively.

It is thus seen that the non-tariff income have been projected on the lower

side in the MYT petition. Moreover, the year-on-year increase of mere 1%

considered by DPL is very unreasonable as the actual increase was 70% in

FY 2012 – 2013 over FY 2011 – 2012 levels.

BIWA pray that the Commission may approve non-tariff incomes based on

past trends and considering a year-on-year escalation of atleast 10% over the

control period.

The Commission agrees with the point and considers non-tariff income after

applying a growth rate on last audited value available on this head where the

growth rate is considered at 1% less rate of the average growth rate on this

head for last five years.

3.3.1.13 Income from Unscheduled Interchange (UI) of power:

DPL had earned an amount of Rs. 1941.41 lakh and Rs. 694.10 lakh from the

UI of power during FY 2011 – 2012 and 2012 – 2013 respectively. But in the



MYT petition, DPL have not projected any such income during the fourth

control period. BIWA prays that considering past trends and the energy

surplus position which DPL aims at to attain after commissioning of unit VIII,

the Commission considers an appropriate amount of UI earnings during the

fourth control period and allow it as a deduction from the ARR being

determined in terms of regulation 5.17.3.

The Commission is of the opinion that UI is not a normal business process

and cannot be assessed in tariff determination stage. UI occurs during real

time operation and thus it is applicable at the stage of FPPCA / APR

determination as per Tariff Regulations.

3.3.1.14 Violation of Regulations in computing Provisional Tariff of Unit No. VII:

It is stated that the project cost of unit VII could not be finalized in the APR

order dated 09.09.2013 by the Commission since DPL failed to fulfill certain

directives given by the Commission starting from the tariff orders for the FY

2007 – 2008 and thereafter. The same was recorded by the Commission in

paragraph 2.2.1 of the APR order dated 09.09.2013. The objector submits

that the in the said order, the Commission directed DPL to fulfill the

conditions laid down in the relevant Tariff Regulations in respect of

determination of final capital cost.

The objector submits that in the absence of furnishing of information /

documents’ relating to approval of final capital cost / investment approval, the

Commission, as per the provision of the relevant Tariff Regulations, has

power to grant a provisional tariff up to a maximum of 95% of the submitted

project cost prayed by DPL.

The objector also submits that pending the approval of the final project cost of

unit VII of DPL, the Commission, during determination of Aggregate Revenue

Requirements (ARR) for the years 2011 – 2012, 2012 – 2013 and 2013 –



2014 considered provisionally the project cost of unit VII, after deduction of

5% of the project cost, as indicated by the DPL in its tariff application. Hence,

the Commission, after deducting 5% of the provisional project cost amounting

to Rs. 6750.00 lakh allowed 95% of the project cost furnished by DPL.

The Commission has noted the points and in this context has given direction

in direction chapter. However, on the point of allowing excessive amount

towards advance against depreciation, it is to be noted that the amount

released is limited by the restriction as per the regulations but not more than

the amount to meet the repayment of the principal amount of loan.

3.3.1.15 Project cost of Unit VIII:

BIWA has stated that project capital cost of Rs. 6.80 crore/MW is enormously

high considering the unit VIII is a brown-field unit and taking into account the

market scenario when the project was envisaged and implemented. The

Hon’ble Commission and the consumers need to know the capital cost

envisaged, when the Detailed Project Report (DPR) was prepared and what

has been the variation in the actual costs vis-à-vis original cost. Any delay

which could have been avoided and is due to controllable reasons, should be

disallowed and its associated costs in terms of interest during construction

and over heads need to be disallowed.

The Commission has noted the points and dealt with the same in subsequent

chapter.

3.3.1.16 Units proposed to be decommissioned:

BIWA submits that since the units no. III, IV and V are proposed to be

decommissioned, hence any ARR (i.e., return on equity, depreciation, interest

on loan and operation and maintenance expenses) towards such units may

not be allowed in the fourth control period.



The Commission has noted the points and dealt with the same in subsequent

chapter.

3.3.1.17 Consequential impact on interest on working capital:

BIWA submits that there is significant potential disallowance in the claims

made by DPL, which if approved by the Hon’ble Commission, would result in

reworking of the interest on working capital. In the light of the same, it is

stated that the working capital and interest thereon will have to be

recomputed as per the regulations 5.6.5.1 and 5.6.5.2 of the Tariff

Regulations.

The Commission will deal with the matter as per provisions of the Tariff

Regulations.

3.3.1.18 Revenue at current Tariff:

BIWA has submitted that the MYT application of DPL was filed on or around

28.12.2013. Around the same time, the Hon’ble Commission issued the tariff

order for the financial year 2013 – 2014 on 26.12.2013 in which the retail

tariffs were substantially increased. However, for the purpose of estimating

the revenue at current tariffs, DPL has considered the retail tariffs approved

by the Hon’ble Commission in the tariff order for the financial year 2012 –

2013 dated 17.12.2013 which on the current date is no longer applicable.

This resulted in under estimation of the revenue projections at current tariff

over the fourth control period. BIWA also states that the current tariff

proposals for the financial years 2014 – 2015, 2015 – 2016 and 2016 – 2017

made in the MYT petition have become infractuous as they are based on the

old applicable tariffs. BIWA urges the Hon’ble Commission to direct the DPL

to file fresh tariff proposal and allow the consumers to file comments on such

revised tariff proposal.



The Commission will determine the tariffs of DPL for the ensuing years based

on the admissible ARR. The Commission will also view the current tariff as

per the tariff order for 2013 – 2014 while determining the tariff for the ensuing

years.

3.3.1.19 Demand Charges:

BIWA submits that DPL has not provided the details in respect of existing

connected load and the projected load growth in the fourth control period.

Further, in the revenue projections, DPL has shown nil (0) figures towards

same categories of consumers even though demand charges have been

prescribed.

DPL has proposed the demand charge for some categories for which no

revenue is projected. The Commission observes that this may be due to the

fact that there is no consumer under those categories of consumers. The

Commission is of the view that the tariff for those categories under which the

present consumer is nil is required to be determined so that the same may be

applied when any new consumer come under these categories.

3.3.1.20 Voltage wise cost of service and roadmap for reduction of cross subsidy:

BIWA submits that according to the Regulations of the State Commission, it

is bound to determine tariff in a manner such that it reflects the cost of supply

of electricity and also reduces cross subsidies within three years and is

consistent with the National Electricity Policy and Tariff Policy. Section 61(g)

of the Electricity Act, 2003 mandates that the State Commission while

determining the tariff, shall be guided by the objective that the tariff

progressively reflects the cost of supply of electricity and also the cross-

subsidies are reduced. However, the State Commission has not determined

the cost of supplying electricity to the industrial consumers at different voltage

levels and more particularly at higher voltage levels, which would involve



minimal technical losses and distribution expenses. The cross subsidy

surcharge according to Tariff Policy for open access consumer has to be the

difference between the applicable tariff and the cost of the distribution

licensee to supply electricity for the applicable class of consumers. Section

62(2) provides for the factors on which the tariffs of the various consumers

can be differentiated. Some of these factors like load factor, power factor,

voltage, total electricity consumption during any specified period or time or

geographical position also affects the cost of supply to the consumer. Due

weightage can be given in the tariffs to these factors to differentiate the tariffs.

However, BIWA infer the following conclusion after reading the provisions of

the Act, the Policy, Regulations and related judgements:

i) The cross subsidy for a consumer category is the difference between cost

to serve of that category of consumers and average tariff realization of

that category of consumers. While the cross-subsidies have to be

reduced progressively and gradually to avoid tariff shock to the

subsidized categories, the cross subsidies may not be eliminated.

ii) The tariff for different categories of consumer may progressively reflect

the cost of electricity to the consumer category but may not be a mirror

image of cost to supply to the respective consumer categories.

iii) The tariffs should be within + 20% of the average cost of supply by the

end of 2010 – 2011 to achieve the objective that the tariff progressively

reflects the cost of supply of electricity.

iv) The cross subsidies may gradually be reduced but should not be

increased for a category of subsidizing consumer.

v) The tariffs can be differentiated according to the consumer’s load factor,

power factor, voltage, total consumption of electricity during specified



period or the time or the geographical location, the nature of supply and

the purpose for which electricity is required.

In view of above, BIWA urged the Commission to approve the tariffs

considering the voltage wise cost of service and prescribe a roadmap for

reduction of cross subsidy.

The Commission has noted the points and will act according to Tariff

Regulations.

3.4 The Commission has taken note of the objections, suggestions and comments

offered. Some of the objections, suggestions and comments have been dealt

with in the paragraphs above. The objections, suggestions and comments which

have not been dealt with in earlier paragraphs and are directly concerned with

the instant petition, have been considered in the subsequent chapters of this

order in which various components of fixed costs have been analyzed and

discussed.


CHAPTER – 4

SALES, ENERGY BALANCE AND VARIABLE COST


4.1 While determining the Aggregate Revenue Requirement (in short ‘ARR’) for the

years 2014 – 2015, 2015 – 2016 and 2016 – 2017 under the fourth control period

for DPL, the following considerations have been made:

i) As per submission of DPL, the units III, IV and V of 77 MW each are not

in operation and to be decommissioned during 2013 – 2014 in stages and

their related generation, costs, etc. have been omitted from the tariff

determination process.

ii) As per submission of DPL, the date of commercial operation (COD) of

Unit VIII was scheduled on 1st

July, 2014. However, DPL could submit

their completed application for prior approval of the Commission for

synchronization as required under the Regulations for trial run operation

of the unit only on 11.07.2014 and necessary clearance from the

Commission was given on 25.07.2014 for trial run operation on or after

26.07.2014. DPL, however, communicated vide their letter no. MD/DPL/F-

148/2014/100 dated 09.10.2014 the COD of the unit VIII w.e.f.

01.10.2014. The Commission, thus, does not consider the date of COD of

unit VIII as 01.07.2014 as proposed by DPL, but considers to estimate

generation from the unit for a period of six months during the year 2014 –

2015 and all related elements of costs etc. have been considered

accordingly.

Therefore, the following chapters for determination of tariff are related to unit VI

(110 MW), Unit VII (300 MW) and Unit VIII (250 MW) of DPL.



4.2 Projected Sales:

4.2.1 DPL is a multi-disciplinary company. Besides being in the business of power as a

distribution licensee, DPL is having a coke oven plant, a coal washery and a

water treatment plant. The energy requirements of coke oven plant, coal washery

and water treatment plant are met from the power business of DPL and are

treated as inter-plant transfer on cost recoverable basis. In addition to meet its

local demand, DPL will need to supply WBSEDCL at 11 KV and 33 KV at radial

mode. DPL shall supply the surplus energy, if any, to WBSEDCL at 132/ 220 KV

in 2014 – 2015, 2015 – 2016 and 2016 – 2017 as per the projections made by

them. DPL in their application has considered 50 MU as units utilized in own

premises including own consumption / other auxiliary consumption. The

Commission considers 15 MU as consumption in own premises and 35 MU as

inter plant transfer for all the three years viz., 2014 – 2015, 2015 – 2016 and

2016 – 2017. The sale of energy to the consumers in its licensed area, inter-plant

consumptions and sale to WBSEDCL at 11 KV / 33 KV / 132 KV / 220 KV in

radial mode and from Bus in different years of the fourth control period has been

shown as under as projected by DPL:

4.3 Sourcing of Energy for Distribution:

4.3.1 The entire energy requirement of DPL for distribution including inter-plant transfer

generally comes from its own generating units. Part of the ex-bus generation,

remaining surplus after meeting the demand of its licensed area and inter-plant

Figures in Million Units Sl. No. Category of Supply 2014 – 2015 2015 – 2016 2016 – 2017

1 Consumer 2432.190 2905.110 2923.410 2 Inter Plant Transfer 35.000 35.000 35.000 3 Consumption at own premises 15.000 15.000 15.000 4 Sale to WBSEDCL and other licensees 1177.860 1112.420 1112.425 5 Total (1 + 2 + 3) 3660.050 4067.530 4085.835



transfer, is to be sold to WBSEDCL. However, if own generation of DPL during a

period is found inadequate, energy is to be sourced from WBSEDCL or

elsewhere. The quantum of power purchase requirement for DPL from

WBSEDCL can be assessed after considering the projected generation of DPL

as well as the periodicity of such generation.

4.4 Gross Generation:

4.4.1 DPL has projected gross generation of 3995.760 MU, 4432.560 MU and

4432.560 MU during the years 2014 – 2015, 2015 – 2016 and 2016 – 2017

respectively in their MYT petition for the fourth control period considering

generation in full capacity of its units VI & VII and generation of unit VIII after its

COD (01.07.2014). No generation has been projected in respect of units III to V

which were stated to be decommissioned during 2013 – 2014. Gross energy

generation has been projected by DPL for the years 2014 – 2015, 2015 – 2016

and 2016 – 2017 considering the normative PLF of Unit VI to Unit VIII separately.

The Commission admits the projection of generation of DPL for energy balancing

for the years 2014 – 2015, 2015 – 2016 and 2016 – 2017 for Units VI & VII. For

unit VIII, proportionate generation for six months period, as stated in para 4.1

above, has been admitted by the Commission for 2014 - 2015. The Commission,

however, considers gross generation from unit VIII, as projected by DPL, on

normative PLF basis for the year 2015 – 2016 and 2016 – 2017.Accordingly, the

gross generations from these units of DPL for all the three years of the fourth

control period stand as follows:

Year Gross Generation (in MU) Unit VI Unit VII Unit VIII Total

2014 – 2015 578.160 2102.400 876.666 3557.226 2015 – 2016 578.160 2102.400 1752.000 4432.560 2016 – 2017 578.160 2102.400 1752.000 4432.560



4.5 Auxiliary Consumption:

4.5.1 DPL has claimed auxiliary consumption for the Units at 354.89 MU for 2014-15,

394.200 MU for 2015 – 2016 and 394.200 MU for 2016 – 2017. The Commission

has considered auxiliary consumption on the basis of the norms as specified in

the Tariff Regulations and accordingly the auxiliary consumption stands as per

the table below:

Auxiliary Consumption and Ex-Bus Generation (MU)

Year Unit Gross Generation

Rate of Aux. Consumption (%)

Aux. Consumption

Ex-bus Generation

2014 – 2015

VI 578.160 10.00 57.816 520.344 VII 2102.400 8.50 178.704 1923.696 VIII 876.666 9.00 78.900 797.766

Total Ex-bus Generation 3241.806

2015 – 2016

VI 578.160 10.00 57.816 520.344 VII 2102.400 8.50 178.704 1923.696 VIII 1752.000 9.00 157.680 1594.320


2016 – 2017

VI 578.160 10.00 57.816 520.344 VII 2102.400 8.50 178.704 1923.696 VIII 1752.000 9.00 157.680 1594.320


4.6 Distribution Loss:

4.6.1 DPL has projected distribution loss of 136.14 MU for 2014 – 2015, 162.248 MU

for 2015 – 2016 and 163.09 MU for 2016 – 2017. The Commission has allowed

distribution loss as per norms as specified in the Tariff Regulations against

projected sale of energy to the consumers and consumption at own premises.

The inter-plant transfer has not been considered as it does not involve



distribution network. Accordingly, the distribution loss as admitted by the

Commission is shown in the following table:

Distribution Loss

Year As Admitted by the Commission

Sale of Energy to Consumer and consumption at own premises in MU

Distribution Loss in % Distribution loss in MU

2014 – 2015 2447.190 5.20 134.234 2015 – 2016 2920.110 5.20 160.175 2016 – 2017 2938.410 5.20 161.179

4.7 Purchase of Power:

4.7.1 Normally, DPL will not need to purchase any power. But to meet the gap

between demand and available generation, DPL has to purchase some quantum

of power as and when required. Thus purchase of some quantum of power has

been considered.

4.7.2 As per energy balance in paragraph 4.8, the following amounts are admitted as

power purchase cost of DPL for the years 2014 – 2015, 2015 – 2016 and 2016 –

2017 considering the average rate of purchase by DPL from WBSEDCL as given

below:

Sl. No. Particulars 2014 – 2015 2015 – 2016 2016 – 2017

1 Quantum of Purchase (MU) 155.330 191.418 210.560 2 Average rate of Purchase (Paise/kWh) 563.00 619.00 681.00 3 Power Purchase Cost (Rs. in lakh) 8745.08 11848.77 14339.14

4.8 Energy Balance:

4.8.1 On the basis of the analysis done in the foregoing paragraphs, the Commission

admits the following Energy Balance for DPL for the years 2014 – 2015, 2015 –

2016 and 2016 – 2017.



Figures in Million Units Sl. No. Particulars 2014 – 2015 2015 – 2016 2016 – 2017 Sources of Supply

1 Net Ex-Bus Generation 3241.806 4038.360 4038.360 2 Purchase 155.330 191.418 210.560 3 Total Supply (1 + 2) 3397.136 4229.778 4248.920 4 Sale to Consumers 2432.190 2905.110 2923.410 5 Inter-unit Transfer 35.000 35.000 35.000 6 Consumption at own premises 15.000 15.000 15.000 7 Distribution Loss (as per para 4.6) 134.234 160.175 161.179 8 Supply to WBSEDCL and others 780.712 1114.493 1114.331 9 Total ( 8= sum of 4 to 8 ) 3397.136 4229.778 4248.920

4.9 Fuel Cost:

4.9.1 An examination of the projected fuel cost claimed by DPL for the ensuing years

2014 – 2015, 2015 – 2016 and 2016 – 2017 of the fourth control period under

different heads for its power station has been taken up hereunder.

4.9.2 Fuel cost for the power station of DPL as per its projection comes as under:

Fuel Cost in Rupees in Lakh Power Station 2014 – 2015 2015 – 2016 2016 – 2017 DPL VI - VIII 84677.64 100785.72 110864.37

4.9.3 In the tariff application for the fourth control period, DPL has proposed fuel cost

separately for units VI to unit VIII on the basis of norms of plant load factor,

auxiliary consumption rate, oil consumption rate, station heat rate and transit and

handling losses of coal as specified in Schedule 9A of the Tariff Regulations.

4.9.4 The Commission, however, has adopted the procedure for calculation of the fuel

cost in accordance with regulation 5.8.1(ii) of the Tariff Regulations and



normative parameters applicable to DPL as specified in the Tariff Regulations

and allowed fuel cost to DPL as mentioned in subsequent paragraphs.

4.9.4.1 While determining the average price of coal and average price of oil for the years

2014 – 2015, 2015 – 2016 and 2016 – 2017 of the fourth control period, the

Commission has noted that DPL has projected cost of coal based on the

notification no. CIL:S&M:GM(F):Pricing 1965 dated 31 January, 2012 of Coal

India Limited for indigenous coal. Related charges are also factored in terms of

present fuel supply agreement. A number of statutory levies e.g., excise duty at

5.15% and clean energy cess i.e., Rs. 50/- per tonne have also been made

applicable.

4.9.4.2 The Commission, however, goes by the latest price notification No.

CIL:S&M:GM(F):Pricing:235 dated 27 May, 2013, CIL:S&M:GM(F):Pricing:2340

dated 13 November, 2013 and CIL:S&M:GM(F):Pricing:2784 dated 16

December, 2013 issued by Coal India Limited for determining the average price

of coal of 2014 – 2015, 2015 – 2016 and 2016 – 2017 of the fourth control

period. Related charges and the statutory levies are also considered as per the

latest price notifications.

4.9.4.3 The Commission considers the grade wise coal mix as projected by DPL for the

year 2014 – 2015. The Commission does not consider any hike in coal price for

the years 2015 – 2016 and 2016 – 2017. However, any major variation in coal

price in subsequent period will be adjusted through Monthly Variable Cost

Adjustment (MVCA) as per provision of the Tariff Regulations.

4.9.4.4 The average oil price has been considered at the actual price of oil for Rs.

51374.54 per KL during 2012 – 2013 as per audited annual accounts and

enhanced the same by 5% to arrive at the estimated price of Rs. 53943.27 per



KL for the year 2013 – 2014. The Commission observes that the oil prices

decreased to a great extent during the year 2014 – 2015. The Commission, thus,

does not consider any hike in the estimated price of 2013 – 2014 for the ensuing

years. Any difference in actual oil price during the ensuing years will be adjusted

through MVCA as per provision of the Tariff Regulations. The average coal and

oil price based on the proposal of DPL for grade mixing of coal from different

sources and the price of oil for the three ensuing years of the fourth control

period are shown below:

Average Coal Price in Rs./MT Average Oil Price in Rs./KL 2014 – 2015 2015 – 2016 2016 – 2017 2014 – 2015 2015 – 2016 2016 – 2017

2467.53 2467.53 2467.53 53943.27 53943.27 53943.27

Detailed computation of coal price for 2014 – 2015 has been given in Annexure –

4A to this chapter.

4.9.4.5 Heat value of oil for all the three years of the fourth control period has been

considered as per actual heat value of 2012 – 2013 which is 9200 Kcal/lit. Heat

value of coal has been considered as per the Tariff Regulations and the detailed

computations are shown in Annexure 4A to this chapter. However, it is to be

finalized during Fuel and Power Purchase Cost Adjustment (FPPCA) at the end

of the respective year.

4.9.4.6 On the basis of above average price of coal and average price of oil and as per

above heat value of fuel and normative parameters as specified in Schedule 9A

of the Tariff Regulations, the allowable fuel cost is shown by detailed

computation in the table at Annexure-4B to this chapter.



4.9.4.7 The summarized statement of the admitted fuel cost for the power station of DPL

for the fourth control period as per admitted generation in paragraph 4.4.1 above

is given hereunder:

Power Station As admitted

Total fuel cost (Rs. in Lakh) 2014 – 2015 2015 – 2016 2016 – 2017

DPL Unit - VI 13757.51 13757.51 13757.51 DPL Unit - VII 36769.73 36769.73 36769.73 DPL Units - VIII 15841.30 31658.53 31658.53

Total 66368.54 82185.77 82185.77

4.9.4.8 The admitted cost of power purchase from WBSEDCL is Rs. 11260.00 lakh for

2014 – 2015. The admitted costs of power purchase of Rs. 12380.00 lakh for

2015 – 2016 and Rs. 13620.00 lakh for 2016 - 2017 are as per the rate projected

by WBSEDCL. Energy purchase rates from WBSEDCL are 563 paise / unit, 619

paise / unit and 681 paise / unit for 2014 – 2015, 2015 – 2016 and 2016 – 2017

respectively.

4.10 Energy charge for 2014 – 2015 of the power station of DPL now stands as

follows:

Year Fuel Cost (Rs. in Lakh)

Ex-bus Generation MU Energy Charge Paise/ kWh

2014 – 15 66368.54 3241.806 205

4.11 However, if the total generation in any year is less than the gross generation

shown in this order, the matter will be given due consideration by the

Commission in the APR and/or FPPCA for the concerned year. In case of any

major breakdown of any unit resulting in forced shut down of that unit over one

month, the targeted generation will be revised in APR and/or FPPCA after taking

normative PLF and other norms of different operational parameters as specified

in the Tariff Regulations for that unit into consideration.


ANNEXURE 4A


SOURCE / GRADE OF COAL QUANTITY (%) UNIT PRICE IN

RS / TONNEPRICE X QUANTITY

IN RSHEAT VALUE IN KCAL/KG

QUANTITY X HEAT VALUE

ECL - G3 0.009 5685.80 51.17 6200.00 55.80ECL - G4 0.035 5121.72 179.26 5600.00 196.00ECL - G5 0.049 4044.27 198.17 4940.00 242.06ECL - G6 0.028 2352.03 65.86 4940.00 138.32ECL - G7 0.016 2081.80 33.31 4200.00 67.20BCCL - G3 0.001 5685.80 5.69 6200.00 6.20BCCL - G4 0.001 5121.72 5.12 5600.00 5.60BCCL - G5 0.001 4044.27 4.04 4940.00 4.94BCCL - G7 0.027 2081.80 56.21 4200.00 113.40BCCL - G8 0.031 1879.19 58.25 3360.00 104.16BCCL - G9 0.028 1498.77 41.97 3360.00 94.08BECML - G6 0.270 2352.03 635.05 4940.00 1333.80MCL - G9 0.037 1610.26 59.58 3360.00 124.32MCL - G11 0.048 1210.90 58.12 2400.00 115.20MCL - G11 0.247 1210.90 299.09 2400.00 592.80MCL - G13 0.172 1075.79 185.04 1300.00 223.60TOTAL 1.000 1935.93 3417.48

1935.93531.6

2467.533417.48

TOTAL LANDED COST IN RS=

TOTAL PROJECTED COAL COST IN RS =

Projected Coal Price and Heat Value of DPL for the year 2014 - 2015

TOTAL PROJECTEDTRANSPORT COST IN RS =

AVERAGE UHV OF COAL =


ANNEXURE 4B FUEL COST DETERMINATION OF DPL


UNIT VI UNIT VII UNIT VII TOTAL UNIT VI UNIT VII UNIT VIII TOTAL UNIT VI UNIT VII UNIT VIII TOTAL1 Generation MU 578.160 2102.400 876.666 3557.226 578.160 2102.400 1752.000 4432.560 578.160 2102.400 1752.000 4432.560

2 Rate of Auxiliary Consumption % 10.00 8.50 9.00 10.00 8.50 9.00 10.00 8.50 9.00

3 Auxiliary consumption MU 57.82 178.70 78.90 315.42 57.82 178.70 157.68 394.20 57.82 178.70 157.68 394.204 Ex-bus generation MU 520.34 1923.70 797.77 3241.81 520.34 1923.70 1594.32 4038.36 520.34 1923.70 1594.32 4038.365 Station Heat rate KCAL/KWH 3100.00 2345.00 2425.00 3100.00 2345.00 2425.00 3100.00 2345.00 2425.006 Total heat required (1 x 5) M. Kcal 1792296.00 4930128.00 2125915.05 8848339.05 1792296.00 4930128.00 4248600.00 10971024.00 1792296.00 4930128.00 4248600.00 10971024.00

7 Specific Oil Consumption rate ml/kwh 2.75 1.00 1.00 2.75 1.00 1.00 2.75 1.00 1.00

8 Oil Consumed (1 x 7) KL 1589.940 2102.400 876.666 4569.006 1589.940 2102.400 1752.000 5444.340 1589.940 2102.400 1752.000 5444.3409 Average GCV of oil Kcal/lit 9200.00 9200.00 9200.00 9200.00 9200.00 9200.00 9200.00 9200.00 9200.00

10Heat generated from oil (8x9/1000) M Kcal 14627.45 19342.08 8065.33 42034.86 14627.45 19342.08 16118.40 50087.93 14627.45 19342.08 16118.40 50087.93

11Heat generated from coal (6-10) M Kcal 1777668.55 4910785.92 2117849.72 8806304.19 1777668.55 4910785.92 4232481.60 10920936.07 1777668.55 4910785.92 4232481.60 10920936.07

12 Heat value of Coal Kcal/Kg 3417.48 3417.48 3417.48 3417.48 3417.48 3417.48 3417.48 3417.48 3417.48

13 Coal required [(11/12)x1000] MT 520169.41 1436961.13 619710.93 2576841.47 520169.41 1436961.13 1238480.28 3195610.82 520169.41 1436961.13 1238480.28 3195610.82

14Coal required at 0.50%Transit loss MT 522783.33 1444182.04 622825.06 2589790.42 522783.33 1444182.04 1244703.80 3211669.17 522783.33 1444182.04 1244703.80 3211669.17

15 Average Price of Oil Rs/KL 53943.27 53943.27 53943.27 53943.27 53943.27 53943.27 53943.27 53943.27 53943.2716 Average Price of coal Rs/MT 2467.53 2467.53 2467.53 2467.53 2467.53 2467.53 2467.53 2467.53 2467.53

17 Cost of oil [(8x15)/100000] Rs(lakh) 857.67 1134.10 472.90 2464.67 857.67 1134.10 945.09 2936.86 857.67 1134.10 945.09 2936.86

18 Cost of Coal [(14x16)/100000] Rs. (lakh) 12899.84 35635.63 15368.40 63903.87 12899.84 35635.63 30713.44 79248.91 12899.84 35635.63 30713.44 79248.91

19 Total Cost of Fuel (17+18) Rs. (lakh) 13757.51 36769.73 15841.30 66368.54 13757.51 36769.73 31658.53 82185.77 13757.51 36769.73 31658.53 82185.77

As admitted 2016 - 2017

As admitted Sl No PARTICULARS UNIT2015 - 2016 2014 - 2015 As admitted


CHAPTER – 5 FIXED CHARGES


5.1 An examination of the projected fixed charges claimed by the DPL for the years

2014 – 2015, 2015 – 2016 and 2016 – 2017 of the fourth control period under

different heads for its power station and distribution system has been taken up in

this chapter.

5.2 Project Cost:

5.2.1 Project cost of Unit VII:

The project cost of Unit VII of DPL has not yet been finalized by the Commission.

In pursuance of the directives given by the Commission in the tariff order for

2007-08 and also through subsequent letters, DPL has submitted some

documents and clarifications and some information are yet to be submitted. On

the basis of those documents and clarifications furnished and to be furnished by

DPL, the Commission is examining the project cost of Unit VII of DPL. Pending

such examination, the Commission, during determination of Aggregate Revenue

Requirements (ARR) for the years 2014 – 2015, 2015 – 2016 and 2016 – 2017,

has considered the project cost of Unit VII, as indicated by DPL in its tariff

application, provisionally and taken the following decisions:

(i) The report as per regulation 2.8.1.4.13 of the Tariff Regulations has not

yet been submitted by DPL. In terms of the aforesaid regulation,

therefore, 5% of the provisional project cost amounting to Rs. 6750.00

lakh is being withheld for the time being.

(ii) There are other elements in the project cost of Unit VII, which will be

finalized by the Commission on submission of relevant data and for which

additional deduction from the provisional project cost of Unit VII could

have been made at this stage. The Commission, however, has not made

any deduction on these accounts at this stage and the same will be



considered during finalization of the project cost of Unit VII by the

Commission.

(iii) Withholding of 5% of the provisional project cost as per clause (i) above

and thereby reduction of the provisional project cost would have effect on

different fixed charge components viz. depreciation, interest, return on

equity and reserve for unforeseen exigencies. However, while

determining the ARR for DPL for 2014 – 2015, 2015 – 2016 and 2016 –

2017, though deduction has been made from the allocation under

depreciation head, no deduction has been made from the allocation under

advance against depreciation head; rather the allocation under this head

has been increased by the amount disallowed under depreciation head

for 2014 – 2015, 2015 – 2016 and 2016 – 2017, subject, however, to the

ceiling as specified in the Tariff Regulations, in order to facilitate loan

repayments as per schedule. Similarly, in order to facilitate interest

payment, no reduction in the allocation under interest head has been

effected. As reserve for unforeseen exigencies is primarily to protect the

interest of the consumers, no reduction in allocation under this head also

has been effected. These allowances under the heads advance against

depreciation, interest and reserve for unforeseen exigencies, however,

will not be detrimental to the interest of the consumers as the total

withheld amount under clause (ii) above and proportionate disallowance

in the head ‘return on equity’ due to reduction in the provisional project

cost as per clause (i) above will be sufficient to take care of the

allowances mentioned above. These allowances under the head

‘advance against depreciation, interest and reserve for unforeseen

exigencies’ shall not be construed as approval of the Commission to the

project cost applied for.



(iv) The total withheld amounts as per clause (i) to clause (iii) above are

Rs. 313.88 lakh, Rs. 313.88 lakh and Rs. 313.88 lakh for the years 2014

– 2015, 2015 – 2016 and 2016 – 2017 respectively.

(v) As mentioned earlier, the project cost of Unit VII of DPL is under

consideration of the Commission. In case of any disallowance in the

project cost of Unit VII by the Commission, the withheld amounts as

mentioned in clause (iv) above shall be adjusted with the reduction in

project cost, if any, and corresponding impact on tariff shall accordingly

be adjusted in the APR / truing up exercise.

5.2.2 Project cost of Unit VIII:

COD of unit VIII was projected as 01.07.2014. DPL, accordingly, proposed all

costs relating to unit VIII. Considering present development, as stated in

paragraph 5.2.1 of this order, the Commission has decided to estimate the fixed

costs related to unit VIII considering COD on 01.10.2014. Project cost of unit VIII

has not yet been finalized. The Commission accorded second stage approval of

the investment proposal of DPL for unit VIII with an estimated project cost of Rs.

169968.00 lakh. Accordingly, for the reasons stated in paragraph 5.2(i) above,

5% of the estimated project cost of unit VIII, amounting to Rs. 8498.40 lakh, is

being kept withheld for the time being. Commission considers deductions of

different costs in respect of unit VIII, in line with the considerations given in

paragraph 5.2.1(iii) above in respect of unit VII. The total withheld amounts for

unit VIII, as per above are Rs. 74.98 lakh, Rs. 149.96 lakh and Rs. 149.96 lakh

for the years 2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively.

5.3 Employees’ cost:

5.3.1. DPL has proposed its employees’ cost keeping Man / MW ratio as per norm

specified in the Tariff Regulations in respect of the regular employees excluding



that of centrally maintained expenses. In its application, DPL has highlighted the

revision of pay structure effective from 1st

5.3.2. In the table below, the proposal of DPL towards employee cost for 2014 – 2015,

2015 – 2016 and 2016 – 2017 of the fourth control period, submitted under forms

1.12, 1.15 and 1.17 of the tariff petition vis-à-vis actual expense during 2012 –

2013, is depicted. It is observed that DPL proposed a considerable increase in

employee cost and has requested the Commission for allowing the same.

April, 2007 based upon which its

employee cost was determined. The impact of half yearly increase in DA every

year (16%), annual increment (3%) on basic pay and other allowances @ 10%

every year as well as increase in field and night allowances have been

considered by DPL while estimating the future expenses. DPL has also

highlighted the increase in the amount of gratuity limit from Rs. 3.50 lakh to Rs.

10.00 lakh, sizeable increase in amount of employee cost towards statutory

liabilities under AS-15 at revised pay structure. The employee cost of service

department and central workshop allocated to it in pre-determined ratio has also

been considered by them. The employees engaged in operation of unit no. III to

V have been proposed to be suitably redeployed in other existing units including

unit VIII. They have considered only 50% of the Man / MW ratio of unit no. VIII

and rest 50% to be filled up through fresh induction or redeployment to be

assessed after completion of decommissioning of unit III, IV & V.

Rs. in Lakh

Particular Actual as per

audited accounts

2012 - 2013

As Proposed by DPL

Base year

2013 - 14

Increase over

previous year

2014-15 Increase

over previous

year 2015-16

Increase over

previous year

2016-17 Increase

over previous

year Employee cost of regular employees 7031.99 7711.02 9.66% 8432.05 9.35% 9027.64 7.06% 9954.22 10.26%

Share of employee cost of Service Dept. & Central Workshop

3401.48 3729.87 9.65% 4078.02 9.33% 4364.92 7.04% 4811.12 10.22%



Projections for Unit No. VIII 0.00 0.00 - 828.74 - 1216.16 46.75% 1340.98 10.26%

Share of employee cost of Service Dept. & Central Workshop

0.00 0.00 - 69.04 - 101.31 - 111.70 -

Total 10433.47 11440.89 9.66% 13407.85 17.19% 14710.03 9.71% 16218.02 10.25%

5.3.3. Against the above submissions of DPL, the Commission observed as below:

i) As per annual report and accounts for 2012 – 2013, the employee cost for

power plant including terminal benefits and Directors’ fees and expenses

and net of capitalization for 2012 – 2013 was Rs. 7040.71 lakh (Rs.

7031.99 lakh + Rs. 8.72 lakh). DPL has estimated the employee cost for

2013 – 2014 for power plant as Rs. 7711.02 lakh, which is 9.50% higher

than that of actual expense for 2012 – 2013. The Commission has viewed

that latest five DA (Dearness Allowance) increase in Central Government

during 01.07.2012 to 01.07.2014 is 7%, 8%, 10%, 10% and 7%.

Considering the impact of two instalments each at 10% of basic pay and

annual increment @ 3% on basic pay, the annual increase in employee

cost comes to 10.80% [{(3x8% + 6x18% + 3x28% + 12x3%) / 12} x 1/2} +

(3%x1/2x0.2)] [basic pay in the salary is 50% considering existing DA @

80% of basic pay and HRA @ 20% of basic pay in the salary] for the year

2013 – 2014 over the employee cost incurred during the year 2012 –

2013 and the estimated expenses come to Rs. 7801.11 lakh. Thus, the

Commission considers the estimated employee cost for power plant for

2013 – 2014 as Rs. 7711.02 lakh as projected by DPL. The last D.A.

increase announced by the Central Government w.e.f. 01.07.2014 is 7%.

Considering the impact of D.A. instalments @ 10% w.e.f. 01.01.2014 and

@ 7% w.e.f. 01.07.2014 and considering the half yearly D.A. increase @

7% in future and annual increment @ 3% on basic pay, annual increase

in employee cost for the year 2014 – 2015 comes at 9.07% [{(3x10% +



6x17% + 3x24% + 12x3%) / 12} x 1/2.27} + (3%x1/2.27x0.2)] (basic pay

in the salary is 1/2.27 considering the D.A. @ 107% of basic pay and

HRA @ 20% of basic pay in salary) over the estimated employee cost for

2013 – 2014. The Commission considers the increase in employee cost

for the year 2014 – 2015 over the estimated employee cost for 2013 –

2014 @ 9.07%. The estimated employee cost for power plant for the year

2014 – 2015, thus works out at Rs. 8410.41 lakh and the Commission

admits the same. The Commission also considers an annual increase in

employee cost @ 9.07% for the years 2015 – 2016 and 2016 – 2017 and

the amounts work out at Rs. 9173.23 lakh and Rs. 10005.25 lakh

respectively.

ii) However, no employee cost has been considered for unit VIII in 2014 –

2015, 2015 – 2016 and 2016 – 2017 separately as the employees of the

existing units III to V, which have already been decommissioned w.e.f.

01.04.2014 vide Order No. 103-PO/0/VI/5S-23/2009 dated 12.09.2014

issued by the Government of West Bengal, Department of Power & Non-

Conventional Energy Sources, will be deployed in unit VIII. If any

additional employment is required, DPL shall justify the same when they

claim for that in APR for the respective years. DPL may claim any

variation in employee cost in APR for the respective years as per

provisions of the Tariff Regulations.

iii) Allowable manpower of unit III, IV & V, already decommissioned,

considering normative Man / MW ratio as specified in the Tariff

Regulations, is 808 nos. The man power requirement for unit VII (250

MW) as per normative Man / MW ratio is 300 nos. (1.2x250) and

accordingly, the surplus manpower shall be deployed in unit VIII first and

the balance in other units VI, VII and distribution. The Commission



decides not to allow any separate employee cost for unit VIII as proposed

by DPL.

iv) In the submission DPL has stated that 50% of man / MW ratio of unit VIII

is considered for fresh induction and rest 50% for fresh induction or

redeployment after completion of decommissioning of units III to V. DPL

has not given any reason for such proposed fresh induction for unit VIII.

In this context, it is observed that the units III to V have already been

decommissioned as stated above. It is also seen that the surplus man

power as per man / MW ratio for unit III to V is much more than the

required man power for unit VIII. Thus, the Commission does not consider

the proposal of DPL for fresh induction for unit VIII. DPL shall give details

of the manpower employed / engaged in the units from the surplus

employees arising out of decommissioning of unit III to V in their APR

application for 2014 – 2015.

v) Thus, the employee cost as admitted by the Commission for the power

plant are as shown below:

Rupees in Lakh

Sl No Particular

As admitted by the Commission

2014-15 2015-16 2016-17

1 Unit – VI 4532.06 4943.11 5391.45

2 Unit - VII 1737.53 1895.12 2067.02

3 Unit - VIII 0.00 0.00 0.00

4 Sub total of Generation (4=1+2+3) 6269.59 6838.23 7458.47

5 Distribution 2140.82 2335.00 2546.78

6 Total (6=4+5) 8410.41 9173.23 10005.25



(iv) In addition to above, the share of the employee cost against centrally

maintained expenses has also been determined by the Commission and

has been shown separately on the basis of the proposal of DPL

furnished in Form 1.17(h). Centrally maintained expenses have been

segregated by the Commission between distribution and generation

head on the basis of ratio of the employee costs of generation and

distribution of regular employees as per the allocation submitted by DPL.

It is observed that 8.33% of the employee cost of power-stations is the

employee cost for centrally maintained expenses for DPL. In line with

that the Commission has admitted 8.33% of the employee cost of power

station of DPL for centrally maintained expenses for generation wing.

DPL’s distribution business being spread over a small area and major

part of its electricity consumers are bulk in nature in HT level, for DPL’s

distribution business a slightly higher rate of 10% of employee cost of

distribution wing has been admitted as centrally maintained expenses for

DPL’s distribution wing. Accordingly, the expenses for employee cost

against centrally maintained expenses as admitted by the Commission

are shown in the following table.

Rs. in lakh

Sl. No Particular As admitted by the Commission

2014-15 2015-16 2016-17 1 Units – VI 377.52 411.76 449.11 2 Units –VII 144.74 157.86 172.18 3 Unit - VIII 0.00 0.00 0.00 4 Sub total of Generation (3=1+2) 522.26 569.62 621.29 5 Distribution 214.08 233.50 254.68 6 Total (5=3+4) 736.34 803.12 875.97

5.3.4. If there be any variation in the admitted amount, DPL shall furnish relevant

information and supporting documents in this respect with the application for

APR for the concerned year and the same will be considered for adjustment in



APR to the extent it is found fit by the Commission. Along with the information

and documents as mentioned above, DPL shall, in the application for APR for the

concerned year, also furnish the information in the format given in Form 1.17(h)

of Annex – 1 to the Tariff Regulations indicating details in respect of both regular

and contracted employees.

The above information shall also show the expenditure of own employees and

employees on contract in regular establishment separately. Interest payment on

Contributory Provident Fund and General Provident Fund shall not be considered

as it is not permissible unless it is explicitly established that in spite of investment

of such fund in a prudent manner and management of fund efficiently, there is

shortfall in accrued interest to discharge the liability of statutory interest as laid

down in concerned laws. Henceforth, DPL shall show the production incentive

separately in its accounts under generation, distribution and centrally maintained

expenses heads.

5.3.5. In paragraph 4.34 of the tariff order dated 17.12.2012 for the year 2011 – 2012

and 2012 – 2013 in case no. TP-49/11-12 and in paragraph 2.3.7 of the order

dated 09.09.2013 in case no. APR-34/12-13 relating to APR for the year 2011 –

2012, DPL was directed to furnish relevant information and supporting

documents regarding basis of apportionment of centrally maintained expenses in

APR 2012 – 2013 application to establish their claim of apportionment. DPL, in

their application of APR for the year 2012 – 2013, did not furnish the information

and documents towards expenses in the centralized services particularly as

directed by the Commission in order to justify / establish their claim for

proportionate cost of centralized services under the head ‘employee cost’. DPL

have submitted in their brief of submission of APR application for the year 2012 –

2013 that they have not yet been able to physically segregate the centrally

maintained expenses from power plant business and the same was under



process pending apportionment of the centrally maintained expenses to the

power plant business under the head ‘employee cost’ in order to place a more

clear cut accountable system. DPL has submitted the break-up of the expenses

claimed for power plant and proportionate cost of centralized services as per

format 1.17(h) of Annexure – I. However, as required under the Form, the

number of employees engaged both in regular services and contractual services

for generating units have not been found available, in the absence of which it

could not be confirmed whether the same are as per the Man/MW ratio stipulated

in the Tariff Regulations. Nevertheless, DPL is yet to justify / establish the basis

of apportionment of cost of centralized services under the head ‘employee cost’

as claimed by them inspite of specific directions in this regard from time to time.

5.3.6. DPL is directed to submit break-up of the employees engaged both in regular

services and contractual services for their different generating units as per the

format 1.17(h) of the Tariff Regulations. DPL is also directed to submit the basis

of apportionment of employee cost of centralized services in order to justify their

claim under this head.

5.4 Coal and Ash Handling Expenses:

5.4.1 DPL has claimed Rs. 1826.30 lakh, Rs. 2108.86 lakh and Rs. 2214.31 lakh for

2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively towards coal and ash

handling expenses. The proposal of DPL has been analyzed by the Commission

and found that said expenditure as projected are very high in comparison to the

actual expenditure of Rs. 893.72 lakh vis-à-vis actual generation of 1819.206 MU

during previous year i.e., 2012 - 2013 and the projected enhanced generation.

5.4.2 DPL has justified the increase in expenditure under the head mainly on the

following grounds:



i. Huge financial involvement for transportation of excavated ash in the

ensuing years with a view to comply with MOEF guidelines.

ii. High quantity of ash generation due to increased level of generation.

iii. Non-availability of sufficient high grade coal of ECL & MCL leaving to high

generation of ash.

iv. DPL has projected a gross generation level of 3995.76 MU, 4432.560 MU

and 4432.560 MU during the years 2014 – 2015, 2015 – 2016 and 2016 –

2017 respectively.

5.4.3 The Commission, after due consideration of the justification advocated by DPL

and in view of the fact that coal and ash handling expenses are uncontrollable in

nature and are directly related with high level of generation, admits the claim of

DPL as proposed by them in respect of Unit VI & VII. For unit VIII, proportionate

claim has been considered for 2014 – 2015 due to shifting of COD from July,

2014 to October, 2014. However, after submission of APR petitions at the end of

concerned years, the actual expenditure vis-à-vis actual generation will be

viewed separately by the Commission for adjustment of allowable expenses

under this head.

Coal and Ash Handling Expenses Rupees in Lakh Sl. No Particular As admitted by the Commission

2014-15 2015-16 2016-17 1 Unit - VI 393.45 413.12 433.78 2 Unit - VII 867.40 910.77 956.31 3 Unit - VIII 376.97 784.97 824.22 4 Total Generation ( 4 = 1 + 2 + 3 ) 1637.82 2108.86 2214.31



5.5 Water charges:

5.5.1. DPL meets processed water supply requirements for its generating station by

taking supply from its sister water plant unit. The inter-plant transfer rate for such

processed water during 2012 – 2013 was Rs. 6.50 per KL. The actual amount of

expenditure during 2012 – 2013 on this head was Rs. 1917.93 lakh.

5.5.2. DPL has projected expenditures of Rs. 6076.08 lakh, Rs. 6758.52 lakh and Rs.

6758.52 lakh for the years 2014 – 2015, 2015 – 2016 and 2016 – 2017

respectively towards water charges. They have submitted a detailed calculation

of water charges with respect to the projected generation during the ensuing

year. DPL has proposed a revision of rate of processed water to Rs. 15.00 per

KL from earlier rate of Rs. 6.50 per KL on the following grounds:

i) DVC from whom water supply is sourced by DPL, has increased the rate

of water supply to Rs. 28.41 per thousand gallon from earlier rate of Rs.

5.20 per thousand gallons with effect from 1st

ii) Actual rate of industrial water has gone upto Rs. 20.00 per KL and is

likely to be enhanced further.

October, 2012.

iii) Non-charging of water at market rate is becoming unviable by its sister

water plant unit.

iv) The last revision of inter-plant transfer rate of industrial water was made

by DPL from 1.10.2013 @ Rs. 15.00 KL.

5.5.3 DPL has, however, not submitted any copy of the Government order in respect of

interplant transfer rate of industrial water with effect from 1.10.2013. After going

through the facts stated by DPL as mentioned in the foregoing paragraphs and



also the fact that DPL has not submitted any Government order in support of the

claim of revision of interplant transfer rate of industrial water, the expenditure on

water charges being uncontrollable in nature, the Commission admits the

projected expenditures for the years under fourth control period considering rate

of inter-plant transfer @ Rs. 6.50 per KL for the projected generation level in

respect of Units VI & VII. For unit VIII, proportionate amount has been considered

based on COD from 01.10.2014. However, on submission of APR petitions along

with the copy of the Government order regarding interplant transfer rate for

industrial water, the actual expenditure vis-à-vis actual generation will be viewed

separately by the Commission for adjustment of allowable expenses under this

head. Admitted Water charges allocated to generation function of DPL, is given

hereunder:

Rupees in Lakh Water charges / Cess

Sl. No Particular

As admitted by the Commission 2014-15 2015-16 2016-17

1 Unit - VI 533.64 533.64 533.64 2 Unit - VII 1298.23 1298.23 1298.23 3 Unit - VIII 541.38 1081.86 1081.86 4 Total (6=4+5) 2373.25 2913.73 2913.73

5.5.4 It is also noticed by the Commission that DPL has not submitted any detailed

calculation of inter-plant transfer rate of Rs. 15.00 per KL of processed water

indicating both variable cost and fixed costs components of the rate so arrived.

The Commission, accordingly, directs that details of calculation of inter-plant

transfer rate of water at Rs. 15.00 per KL should be submitted by DPL along with

the APR petition of 2014 – 2015.



5.6 Operation and Maintenance (O&M) Expenses, Rates & Taxes and Insurance:

5.6.1. O&M Expenses for Generation:

DPL has proposed decommissioning of unit III, IV and V in phases during 2013-

14. As far as O&M expenses of generation function is concerned, the

Commission goes in accordance with the norms specified in schedule 9A of the

Tariff Regulations for Units VI and VII and considering proportionate allowable

cost for Unit VIII for 2014 – 2015 based on COD in October, 2014. Accordingly,

the Commission admits the O & M expenses for generation function of DPL for

the years 2014 – 2015, 2015 – 2016 and 2016 – 2017, as given below:

Rupees in Lakh Operation and Maintenance Expenses for Generation Function

Unit 2014 – 2015 2015 – 2016 2016 – 2017

Unit VI (110 MW) 1824.90 1988.80 2168.10 Unit VII (300 MW) 2115.00 2241.00 2376.00 Unit VIII (250 MW) 651.25 1380.00 1462.50 Total O&M Expenses 4591.15 5609.80 6006.60

5.6.2. O&M Expenses for Distribution function, Rates & Taxes and Insurance:

The Commission has made prudent analysis of the charges claimed by DPL

under the following heads

(i) different sub-heads of O&M expenses for distribution function;

(ii) Rates and Taxes charges; and

(iii) Insurance charges.

While determining fixed charges on such heads for the fourth control period

(2014-15, 2015-16 & 2016-17) the following considerations have taken place.



5.6.2.1 DPL has referred the current inflation rate of 9 %. Commission finds no merit in

considering the current inflation rate for estimate purpose when such estimate

will be applicable for thirty six months. The Commission instead of considering

the inflation rate of 9% in general for projection purpose decides to proceed in a

further rational manner by following a methodology that has been applied for all

distribution licensees subject to case specific differences in some cases to

protect the interest of the consumers as far as possible after meeting

requirement of reasonable tariff determination to provide end of justice to all of

the concerned stakeholders as deemed fit by the Commission. Moreover by the

time of processing the tariff application by Commission the inflationary trend

shows downward direction. The Commission decides to determine projected

inflation rate and the resultant escalation rate in view of such inflation rate as

detailed out in subsequent paragraphs.

Commission observed that Central Electricity Regulatory Commission based on

a hybrid index of WPI (Wholesale Price Index) & CPI (Consumer Price Index)

has observed an annual inflation trend of 8.35% while fixing the norms of O&M

expenses in Central Electricity Regulatory Commission (Terms and Conditions of

Tariff) Regulations, 2014 (hereinafter refer to as ‘CERC Tariff Regulations’) for

central sector utilities for the period 2014-2019. This inflation trend of 8.35 % is

computed based on five year average of WPI and CPI indices for FY 2008-09 to

FY 2012-13 considering 60% and 40% weightage on WPI and CPI respectively.

However, while fixing norms of O&M cost (which includes employee cost also)

the annual escalation rate on O&M expenses during the period 2014-2019 has

been considered as 3.32% for A.C. transmission system as per the statement of

reasons of the CERC Tariff Regulations for the said period. This 3.32% is the

110% of the actual Compounded Annual Growth Rate (CAGR) (3.02%) of O&M

expenses for A.C. transmission system during the period 2008-09 to 2012-13

computed on the basis of 70% weightage on actual O&M cost of per bay of sub-

station and 30% weightage on actual O&M cost of per CKM transmission line.



Taking the above mentioned principle adopted by CERC as a guideline

Commission also decides to find out a reasonable annual escalation rate for DPL

for all sub-heads of O&M expenses for distribution function, rates & Taxes and

insurance with certain deviation based on certain reasons as explained below:

a) The control period is of three years and as more than 6 months of 2014 has

already passed thus the inflation trend between October, 2011 and

September 2014 has been computed where weightage has been given to

WPI & CPI at the ratio of 60:40 in line with the norms fixation methodology

under CERC Tariff Regulations. This is being done in order to capture the

realistic trend of 2014-15 as far as possible so that projection for fourth

control period can have better accuracy. Accordingly based on the WPI

numbers and CPI numbers as available in the website of Economic Advisor

of GOI for WPI and Labour Bureau of GOI for CPI the computed inflation

trend for the above 36 months are given in the following table 5.6.2.1-I.

Table- 5.6.2.1-I TREND OF INFLATION RATE FOR THE PERIOD OCTOBER 2011 TO SEPTEMBER 2014

Average inflation rate as per WPI from October 2011 to September 2014 6.62 Average inflation rate as per CPI from October 2011 to September 2014 9.15 Average inflation rate as per WPI + CPI (60:40) from October 2011 to September 2014 7.63 Note : For detail data at Annexure – 5A may be seen

b) Different sub heads under O&M expenses, rates and taxes and insurance are

effected by inflationary trend but at different degrees depending on the

characteristics of such head or sub-head. In this context two recognized

inflationary trends used in the country are WPI index and CPI index. Along

with this two types of inflationary rate for power sector another third type

inflationary rate used by the Commission is based on hybrid index (WPI+CPI)

as explained in paragraph (a) above. In table-2 in Annexure-5B the basis of

inflationary rate considered for such heads and sub-heads of expenditure are



given. In this context it is to be noted that all these heads of expenditure are

treated as heads under O&M function of CERC tariff regulations. Accordingly

the above inflation rate as given in the table above are used for applicability

in giving escalation in 2015-16 & 2016-17 with respect to the previous years’

admitted expenditure to find out the admitted expenditure of the referred

heads in those years. Thus the inflation rate considered for tariff computation

is as per the following table 5.6.2.1- II.

Table 5.6.2.1-II

INFLATION TRENDS Financial Years CPI WPI Combined WPI &

CPI (60 : 40) Remarks

2010-11 10.53 9.57 9.96 Actual 2011-12 8.42 8.96 8.74 Actual 2012-13 10.43 7.36 8.59 Actual 2013-14 9.72 5.98 7.47 Actual 2014-15 6.81 4.78 5.59 As per 6 months trend 2015-16 9.15 6.62 7.63 As per Table 5.6.2.1-I & as

explained above 2016-17 9.15 6.62 7.63 2011-12 to 2013-14 9.52 7.43 8.27 Averaged on annual basis 2010-11 to 2013-14 9.78 7.97 8.69

Note : For detail data at Annexure – 5A may be seen

In 2014-15 as the trend is downward than the value under Table 5.6.2.1-II

and the time already passed in 2014 – 2015 has covered fifty percent of the

period, such value has been considered with due insulation against

uncertainty wherever required through providing necessary certain additional

float.

c) For finding out the expenditure to be admitted by the Commission, the

estimated expenditures of 2013-14 submitted by DPL are scrutinized by the

Commission so that overestimated value can be rationalized to a reasonable

extent. This is being done as otherwise the existence of overestimated

expenditure for 2013-14 may result into unreasonably higher admitted

amount for fourth control period as because the computation for projection of



expenditure for 2014-15 to 2016-17 are done by applying the annual

escalation rate over the estimated figure of 2013-14. On the estimated value

as provided by DPL for 2013-14 Commission finds that against some

elements the estimation of expenditure seems to be on higher side as it has

been noticed that the estimated expenditure for some elements in 2013-14 as

made by DPL has a sharp increase which does not commensurate with the

previous trend even after considering the inflationary trend and impact of

business volume increase in a same way as has been considered for other

distribution licensee. The Commission cannot accept such over estimation.

In any year this deviation can occur for any item of expenditure but it cannot

be considered as a trend for future projection. The estimated expenditure of

elements which are identified to be overestimated by DPL for 2013-14 are on

the heads of repair & maintenance, audit fees, rates and taxes and

insurances. Thus for realistic projection for 2013 - 2014 the impact of

business volume increase has been given as 2% on items which are

sensitive to Consumer strength moderately. Such impact has been

considered as 1% where the expenditure of item is sensitive to distribution

line length. In such case Commission has done its own estimation based on

the Table-1 of Annexure–5B by applying its prudence which is explained

below item wise.

i) Commission estimates the expenditure for 2013-14 by analyzing the past

trend of expenditure on Repair & Maintenance Expenditure head during

the first two year of the third control period as is being shown in the

following table.

Particulars 2011-12 2012-13 R&M expenditure for distribution as proposed in tariff application (Rs Lakh) 1743.76 1859.01 Actual expenditure as per annual accounts/APR (Rs Lakh) 1091.29 1075.32

Actual expenditure w.r.t proposed amount in tariff application in % 62.58 57.84



From the above table it is seen that DPL’s projection in past is highly over

projected. In fact the average rate of actual expenditure during first two

years of third control period with respect to DPL’s own projection is

60.21%. Considering this rate the commission hence estimated the

expenditure for 2013-14 as Rs 1190.24 lakh.

ii) The estimated expenditure of Audit fees by DPL is slightly high in 2013-

14. Thus keeping the increasing trend from 2010-11 to 2012-13 and rate

of increase in the said period, the estimated expenditure for 2013-14 as

determined by Commission is Rs 0.68 Lakh.

iii) The estimated expenditure of rates & taxes for DPL is slightly high in

2013-14. Thus Commission estimates the expenditure of 2013-14 by

giving inflationary impact on actual value of 2012-13 along with additional

impact of 1% due to business volume increase as is being done for other

distribution licensee for the same period. Accordingly the estimated

expenditure by Commission on rates & taxes is Rs 4.455 lakh.

iv) The past trend of expenditure on insurance heads for DPL is highly

fluctuating and no significant trend can be established. Thus the average

expenditure of Rs 85.96 lakh for the period 2009-10 to 2012-13 is

considered by the Commission as estimated expenditure for 2013-14.

All the above estimated expenditure for 2013-14 by the Commission will be

used by the Commission only for the projection of expenditure during ensuing

years of fourth control period.

d) Where the past CAGR of expenditure of any above referred elements for any

period between 2010 – 2011 and 2013 – 2014 which has been considered as

basis for escalation rate for future projection for the fourth control period and

is lesser than the corresponding inflationary rate of the same period as



provided in table 5.6.2.1-II in such case in line with CERC’s principle 110%

(an additional 10% margin over actual growth rate) of such growth rate is

considered as the annual escalation rate for 2014-15 to 2016-17 for the

following reasons.

i) To ensure the interest of different stakeholders in a more better way from

the point of view of availability considerations of the network asset and

different services

ii) also to provide a comfort to DPL in carrying out O&M of the assets by

extending an additional insulation against uncertainty arising out of

increased expenditure for any unforeseen reason.

It is to be noted that for the said period the expenditure considered for 2013-

14 is estimated one by the Commission and for 2010-11, 2011-12 & 2012-13

actual expenditure has been taken. In general, the non zero least positive

value out of the three periods (2010-11 to 2013-14, 2011-12 to 2013-2014

and 2012-13 to 2013-2014) is considered for projection of estimated

expenditure of heads of any year under the fourth control period. The CAGR

for certain period is also considered where Commission finds that such

decision will provide more rationale and better accuracy in the projected

admitted cost.

e) Where the projected expenses by DPL is less than the estimated value of

2013-14 by the Commission and also actual value of 2012-13 in such case

no escalation is being allowed for fourth control period because DPL’s

projection is considered as admitted figure.

f) Where the past data shows irrational/asymmetric character in such case

Commission by applying due prudence take an appropriate escalation rate

which is discussed in relevant portions.



g) Where annual escalation rate or CAGR of past period crosses the concerned

inflation rate of the said past period in such case escalation rate for projected

expenditure due to business volume increase is computed from past trend by

reducing it with the concerned inflation rate of the relevant past period and

that has been explained in the relevant portions. In such case the annual

escalation rate for 2014-15, 2015-16 and 2016-17 are as follows:

Annual Escalation Rate (%) for any ensuing year = A+ R × BGR+Ad_F

Where A = Inflation rate (%) based on CPI or WPI or hybrid

(WPI+CPI) index as applicable for the fixed charge

element.

R = Ratio of percentage annual increase in expenses in

the past period and percentage increase in

business volume parameter during the same

period.

BGR = Projected growth rate (%) for the ensuing year of

the business volume parameter to which the fixed

charge element under consideration is sensitive.

Ad_F = Additional float in % as decided by commission to

provide insulation against uncertainty in projected

inflation or business volume growth.

For such annual escalation rate calculation the annual increase (%) in

expenses as required for calculation of R is decided by the Commission by

taking the lowest positive CAGR value from among CAGR of 2013-14 (i.e.,

annual increase rate) or CAGR of 2011-12 to 2013-14 or CAGR of 2010-11 to

2013-14 subject to different aspects considering rationality or level of



asymmetric character of past data as has been explained in the relevant

portion. However, principally wherever R on computation found to be higher

than one then in such case R is considered not more than 1 as Commission

is of the opinion that rate of increase in expenses due to business volume

increase cannot surpass the rate of increase in business volume parameter

unless there is any specific reason which can be established by the licensee.

Similarly when R is found to be a value between 0.5 and 1 then also in

ensuing year annual escalation rate is further reduced by a small quantum

with an objective of gradual improvement in efficiency of the licensee in

expenditure control by utilizing different resources in a more effective

manner.

Where necessary while computing additional expenditure represented by

(R×BGR) of any element of fixed charge due to increase in business volume

that additional expenditure is modified in a reasonable and rational manner

after taking the impact of above mentioned sensitivity parameter on the

additional expenditure. Detail of such modification and any other specific

consideration are detailed out in relevant portion where each element of fixed

charge is dealt with. For controllable factor additional float of 0.5% is given to

cover any expenditure hike due to any unforeseen reasons.

h) Commission decides that for the ARR determination in the tariff order of

fourth control period the impact of increase in business volume on different

sub-heads/ heads will also be considered from the point of sensitivity of the

head/sub-heads to certain business volume parameter. For such purpose in

the business process of DPL there are two important business volume

parameters such as Distribution line length (DDL) in Circuit Kilometer (CKM)

and Consumer strength. Different elements of fixed charge elements are

sensitive to either of the above two parameters and where such element is

sensitive to consumer strength there is variation in the degree of such



sensitivity. After applying such degree of sensitivity the number of business

parameters considered in this tariff order are Distribution Line Length (DLL),

Consumer Strength in moderate degree(CSM), Consumer Strength in high

degree (CSH) and Consumer strength with lesser degree than CSM

(CSM-L). The Table 1 under Annexure 5B shows the concerned business

volume parameter sensitivity against different elements of the fixed charges.

i) DPL has projected consumer strength annually from where its annual growth

rate for 2014-15, 2015-16 and 2016-17 are 2.61%, 4.02% and 0.16%

respectively. However, for projection purpose escalation rate on consumer

strength has been considered for 2014-15, 2015-16 and 2016-17 as 2.61%,

4.02% and 4.02% respectively also as because the consumer strength

increase shown for 2016 – 2017 is very low. In absence of any projection in

distribution line length the projected annual escalation rate considered by

DPL for 2014-15, 2015-16 and 2016-17 are also considered as 2.61%, 4.02%

and 4.02% in line with the escalation rate of Consumer strength.

While projecting the above figure it has been considered that as the original

tariff application is submitted at the end of December, 2013 thus it can be

considered that the estimated data for 2013-14 will have high degree of

accuracy.

During truing up in Annual Performance Review (APR) of the above ensuing

years of 2014-15 to 2016-17 such projected distribution line length in CKM

and Consumer Strength in number as given above shall be considered as the

basis against which the expenditure has been admitted during concerned

tariff order and accordingly truing up will be taken up.

j) For computation of computed expenditure by the Commission on different

heads for 2014-15 to 2016-17 the base expenditure over which the above



escalation rates are applied has been considered on the estimated

expenditure of 2013-14 made by DPL and duly modified in some elements by

the Commission as explained in paragraph (g) above. This is being done as

the application of tariff is submitted at the end of December, 2013 and is likely

to have little inaccuracy with respect to actual expenditure or in other word

having better accuracy.

k) Based on the above principle the projected expenditure on above mentioned

different elements of fixed charges for 2014-15, 2015-16 and 2016-17 has

been computed and then compared with the claimed amount of DPL for the

said year and whichever is lowest is being admitted in this tariff-order.

5.6.2.2 O&M Expense determination for distribution function: Based on the laid

down principle in paragraph 5.6.2.1 above following different sub-heads of O&M

function are determined. In this context tables in Annexure – 5B may be referred

to for the past trend of expenditure.

a) Audit fees and Repair & Maintenance Expenditure : For these two

elements, the escalation rate that is considered for projection of expenditure

in 2014-15, 2015-16 and 2016-17 is on the basis of CAGR of the period

2011-12 to 2013-14 because other two periods under consideration has

either negative growth rate or higher growth rate. The past trend of

expenditure in third control period also shows very insignificant growth rate in

expenditure on these two heads. Accordingly the escalation rate thus

selected is the CAGR of 2011-12 to 2013-14 which is found to be lesser than

the average inflation rate for the above period. Then by using such escalation

rate in the methodology as mentioned in sub-paragraph (d), (j) and (k) of

Paragraph 5.6.2.1 the admitted amount found for ensuing years of 2014-15

to 2016-17 are given in Table 5.6.2.2-I.



b) Other administrative and general expenditure: For this element of

expenditure the escalation rate considered is also CAGR of 2011-12 to 2013-

14 as such rate is found to be more logical in view of past data trend of actual

expenditure between 2010-11 to 2012-13 and also in view of inflationary

trend. Such escalation rate is however lower than the average inflation rate of

the above period. Thus by using such escalation rate in the methodology as

mentioned in sub-paragraph (d), (j) and (k) of Paragraph 5.6.2.1 the admitted

amount found for ensuing years of 2014-15 to 2016-17 are given in Table

5.6.2.2-I.

c) Thus the admitted expenditure for DPL under O&M expenses for distribution

function are as follows:

Table 5.6.2.2-I Sl

Particulars

As Claimed by DPL Ltd As Admitted by Commission

2014-15 2015-16 2016-17 2014-15 2015-16 2016-17

1. R & M Charges 1327.25 1440.61 1565.29 1213.00 1236.00 1259.00 2. Audit Fees 0.82 0.90 1.00 0.82 0.90 1.00 3. Other A&G expenses 662.35 728.81 801.70 637.00 674.00 713.00 4. A&G expenses (2+3) 663.17 729.71 802.70 637.82 674.90 714.00 5. O&M expenses (1+4) 1990.42 2170.32 2367.99 1850.82 1910.90 1973.00

Note : For detail calculation tables 1, 2 & 3 tables under Annexure-5B may be seen

5.6.2.3 Some Small Expenditure: Some of the small items viz., a) rates & taxes and b)

insurance are uncontrollable in nature till the third control period and thus they

are all dealt separately under paragraphs as below.

a) Rates & Taxes:

For this element the escalation rate considered is the annual growth rate of

2013-14 over 2012-13 as such value shows a reasonable annual escalation



rate than the extremely high value of other two periods which cannot be a

regular pattern. Thus by using such escalation rate for projection purpose of

this uncontrollable item for the period 2014-15 to 2016-17 the sub-paragraph

(g), (i) and (k) of Paragraph 5.6.2.1 has been applied. The admitted amounts

are given in Table below. The entire amount is allocated to the generation

function as proposed by DPL.

Sl

No. Expenditure

Head As Claimed by DPL As Admitted by

Commission 2014-15 2015-16 2016-17 2014-15 2015-16 2016-17

1. Rates & Taxes 6.18 6.80 7.48 5.00 5.00 5.00

Note : For detail calculation tables 1,2 & 3 under Annexure-5B may be seen

b) Insurance:

For this element of uncontrolled type of expenditure the trend of escalation

rate is CAGR of 2011-12 to 2013-14 as such rate is found to be only non zero

positive rate out of the growth rates of all three periods under consideration.

However such escalation rate is found to be lower than the average inflation

rate of the above period. Thus by using such escalation rate in the

methodology as mentioned in sub-paragraph (d), (i) and (k) of Paragraph

5.6.2.1 the admitted values found for the above referred heads for ensuing

years of 2014-15 to 2016-17 are given in Table below. The entire amount is

allocated to the generation function as proposed by DPL.

Sl No. Expenditure Head As Claimed by DPL As Admitted by Commission 2014-15 2015-16 2016-17 2014-15 2015-16 2016-17

1. Insurance 116.56 128.22 141.04 92.00 99.00 106.00 Note : For detail calculation tables 1,2 & 3 under Annexure-5B may be seen



5.6.2.4 It is to be noted that the estimated expenditure those are only determined by the

Commission for 2013-14 against any head or subheads as discussed above in

sub paragraph (i) to (iv) of paragraph 5.6.2.1(c) has been considered as base

year expenditure for those heads for tariff determination purpose only for fourth

control period. In case any of such estimated expenditure made by the

commission is found to be less than the audited actual expenditure for 2013-14

vis-à-vis business volume parameter increases then the consequential impact on

the projected expenditure against concerned heads/sub-heads for the period

2014-15 to 2016-17 will be passed through tariff in APR of concerned year

separately irrespective of whether such item is controllable factor or

uncontrollable factor. During truing up exercise in APR of the concerned year the

estimated expenditure of all the elements of different heads as mentioned in

paragraph 5.6.2.1(c) above for 2013-14 are to be considered as has been

incurred against the actual value of the business volume parameter (,i.e, DLL

and consumer strength) that has been achieved at the end of 2013-14. In case

the actual value of DLL or consumer strength in 2013-14 is found to be higher

than the estimated value that has been considered for 2013-14 in this tariff order

then impact of such enhanced amount will be added to the projected value of

DLL or Consumer strength for the period 2014-15 to 2016-17 of the tariff order to

find out the target business volume parameter against the projected expenditure

that has been admitted in the tariff order. On the basis of such revised targeted

business volume parameter the truing up exercise in APR will be done while

applying the regulation 2.6.10(v) of the Tariff Regulations.

5.6.2.5 The above expenditure be availed of on adherence to the conditions as

prescribed in regulation 5.23.1 of the Tariff Regulations.



5.6.2.6 DPL is directed to submit the details of the process adopted for selection of the

Insurance Company and the items covered along with the APR application for

the respective years.

5.7 Demurrage:

5.7.1 DPL has projected Rs. 179.01 lakh, Rs. 196.91 lakh and Rs. 216.60 lakh as

probable demurrage charges payable during the years 2014 – 2015, 2015 –

2016 and 2016 – 2017 respectively. DPL has not advanced any reason for the

need of demurrage charges nor it has submitted any documents in support of the

claim.

5.7.2 During the year 2012 – 2013, the actual amount of expenditure was for Rs.

106.62 lakh. In terms of regulation 5.8.1(vi) of the Tariff Regulations, the

demurrage charge of railway rake is an indicator of efficiency of rake unloading

capability of the generating stations. For existing generating stations, allowance

for the demurrage will gradually be reduced to a target in a phased manner within

a stipulated period as per regulation 2.8.6 of the Tariff Regulations. It appears

that DPL has not put any endeavour for gradual reduction of demurrage charge,

instead the expenditure had gradually been increased over the years as evident

from the year 2012 – 2013 and projection for the years 2014 – 2015, 2015 –

2016 and 2016 – 2017.

5.7.3 The Commission could not admit the claim in its present form. However, such

need of demurrage charges cannot be ruled out totally in exigencies of

generation of power. During Annual Performance Review, DPL may approach

the Commission with actual expenditure incurred as per audited annual accounts

with detailed justification and a deliberation with planned gradual reduction of the

charge for consideration.



5.8 Development Fund:

5.8.1 DPL, in their MYT petition for the fourth control period, has proposed for creation

of development fund in terms of regulation 5.19 of the Tariff Regulations. For

such creation, they have projected the need of Rs. 3921.02 lakh, Rs. 4271.50

lakh and Rs. 4327.57 lakh during the years 2014 – 2015, 2015 – 2016 and 2016

– 2017 respectively and prayed for providing the same as special allocation in

the gross revenue requirement for the respective years.

5.8.2 The Commission observes that DPL has neither mentioned the purpose of such

fund for a particular function nor they have segregated it function wise. DPL has

also not mentioned whether they will be able to comply with all the provisions of

the Regulations to maintain such fund. The Commission, therefore, decides not

to admit any amount under this head at present.

5.9 Depreciation:

5.9.1. DPL has submitted detailed computations in this regard and the Commission

agrees to such computations for depreciation. The Commission however, has

allowed depreciation considering 5% reduction of provisional project cost of Units

VII & VIII on the ground as mentioned in paragraphs 5.2.1 and 5.2.2 and the

amounts of depreciation admitted by the Commission stand as follows:

Rupees in Lakh Depreciation


2014-15 2015-16 2016-17 1 Unit - VI 62.33 62.33 62.33 2 Unit - VII 4792.43 4792.43 4792.43 3 Unit - VIII 4267.60 8527.44 8527.44 4 Sub total of Generation (4=1+2+3) 9122.36 13382.20 13382.20 5 Distribution 1089.67 1260.24 1260.24 6 Total (6=4+5) 10212.03 14642.44 14642.44



5.10 Advance against Depreciation:

5.10.1 The statements of capital borrowings and computations of chargeable interest

with reference to scheduled repayments show that DPL will require the following

amounts to make the total repayments in different years:

5.10.2 As a portion of the depreciation relating to units VII & VIII of the power plant has

been reduced, DPL will require additional amounts towards advance against

depreciation to keep up its loan repayment commitments considering DPL as a

whole (power business only). The amounts chargeable for depreciation in

different years under the control period, as shown in paragraph 5.9 will fall short

of the amounts required for repayments of loans. The net short fall for DPL as a

whole (power business only) will be as under:

Rupees in lakh

Year Amount of Loan Repayments Chargeable depreciation Shortfall

2014 – 2015 12666.60 10212.03 2454.07 2015 – 2016 17198.60 14642.44 2556.16 2016 – 2017 17198.60 14642.44 2556.16

5.10.3 To facilitate the scheduled loan repayments, the Commission considers to allow

the amounts of net shortfall as shown above as advance against depreciation in

terms of the Tariff Regulations. The allowable amounts of advance against

depreciation, therefore, are being allowed as per following allocation as shown

under:

Rupees in lakh 2014 – 2015 12666.60 2015 – 2016 17198.60 2016 – 2017 17198.60



Rupees in Lakh Advance against Depreciation


2014-15 2015-16 2016-17 1 Unit – VI 0.00 0.00 0.00 2 Unit - VII 2189.17 2018.60 2018.60 3 Unit – VIII 264.90 537.56 537.56 4 Sub total of Generation (4=1+2+3) 2454.07 2556.16 2556.16 5 Distribution 0.00 0.00 0.00 6 Total (6=4+5) 2454.07 2556.16 2556.16

5.11 Write off of Intangible Assets:

5.11.1 DPL has not projected any amount under the head intangible assets written off

during the years 2014 – 2015, 2015 – 2016 and 2016 – 2017. Hence no amount

is considered by the Commission.

5.12 Interest on Borrowed Capital:

5.12.1 DPL has provided detailed computations in regard to its claims towards interest

payable on capital borrowings from Central Electricity Authority (CEA), Power

Finance Corporation Ltd (PFCL) and Govt. of West Bengal. It has not claimed

interest on normative capital borrowings in terms of the Tariff Regulations.

5.12.2 DPL, in their submission, has highlighted the reason for providing the interest

liability for Rs. 3440.55 lakh of the loan from CEA for Rs. 1181.00 lakh upto

31.03.2013 which was obtained long back and yet to be repaid. This includes

penal interest also. In the APR order for 2011 – 2012 DPL was directed to submit

a detailed deliberation underlying the background of backlog interest for Rs.

3440.55 lakh above followed by a statement of interest actually paid so far year

wise, statement of interest payable, penal interest chargeable / paid year wise,

year wise provision in audited annual accounts, approach to CEA for making the

payment of the principal and interests and their response, highlighting the

reasons for failing to make timely payment of interest inspite of allowing the same



through APR orders issued by the Commission from time to time with fixing up of

accountability in this regard in a specific manner and then prefer the claim having

a valid support of the actions taken on the above points. The copies of all

correspondences made with CEA, the loan agreement underlying the terms and

conditions of payment and agenda notes with resolution of the Board of DPL may

be annexed to such submission. The amount of interest admitted by the

Commission in respective APR orders so far issued may also be mentioned.

Such submission was to be made in the APR application for the year 2012 –

2013 for examination by the Commission before finalizing its fate. DPL have not

complied with above direction of the Commission. Although, DPL stated to have

enclosed year wise statement of the backlog amount of interest, no such

enclosures were found in their petition of APR 2012 – 2013. Nevertheless, the

Commission is of the opinion that the consumers at large cannot be burdened

with the amount of interest including backlog interest for failure on the part of

DPL to repay the amount of loan in time thereby accruing huge amount of

interest liability. Thus, no interest on the loan from CEA as claimed by DPL for

the ensuing years under fourth control period is considered by the Commission. It

is directed that DPL should not come up with this interest burden on loan from

CEA in future.

5.12.3 The amounts of interest chargeable to Revenue Requirement are admitted and

allocated as suggested by DPL as under: Rupees in Lakh

Interest on borrowed capital Sl No Particular As Proposed by DPL As admitted by the Commission

2014-15 2015-16 2016-17 2014-15 2015-16 2016-17 1 Unit – VI 1017.35 1020.17 1023.00 838.94 838.94 838.94 2 Unit - VII 4961.46 4153.17 3366.09 4961.46 4153.17 3366.09 3 Unit – VIII 11530.49 15224.65 14572.38 8092.30 15773.04 14685.24

4 Sub total of Generation (4=1+2+3) 17509.30 20397.99 18961.47 13892.70 20765.15 18890.27

5 Distribution 1457.19 1338.75 1215.40 1457.19 1338.75 1215.40 6 Total (6=4+5) 18966.49 21736.74 20176.87 15349.89 22103.90 20105.67



5.12.4 The interest on capital borrowings, however, is not kept withheld for reduction in

provisional project cost of Unit VII & VIII for reasons mentioned in paragraph

5.2.1 (iii) and 5.2.2 of this order.

5.13 Other Finance Charges:

5.13.1 The amounts claimed by DPL towards other finance charges comprising

Guarantee Fees and Bank Charges are as under and the claims are found

reasonable and hence allowed.

Rupees in lakh Sl.No Particular As proposed by DPL and admitted by the Commission

2014-15 2015-16 2016-17 1 Unit – VI 135.69 131.10 125.59 2 Unit - VII 386.26 325.03 262.22 3 Unit – VIII 1325.46 1325.56 1325.67


5 Distribution 56.39 40.40 24.54 6 Total (6=4+5) 1903.80 1822.09 1738.02

5.14 Bad Debts:

5.14.1 In terms of regulation 5.10.1 of the Tariff Regulations, the Commission may allow

amounts of bad debts as actually had been written off in the latest available

audited accounts subject to a ceiling of 0.5% of the annual gross sale value of

power at the end of the current year. DPL has projected Rs. 921.03 lakh, Rs.

1022.36 lakh and Rs. 1054.51 lakh for the year 2014 – 2015, 2015 – 2016 and

2016 – 2017 respectively towards bad debts.

5.14.2 As the amounts of bad debts have been projected only on prospective basis

without the same having been written off, the Commission is not inclined to admit



the claim as at present for obvious reason. However, after the amounts of bad

and doubtful debts have actually been written off from the book of accounts after

following usual procedure, the same may be considered by the Commission at

the time of Annual Performance Review of the respective years. The

Commission noticed that DPL has not written off any amount of bad debt during

2012 – 2013 and no amount on this account had been claimed in APR for 2012 –

2013.

5.15 Income Tax:

5.15.1 DPL has projected Rs. 3446.06 lakh, Rs. 3697.19 lakh and Rs. 3697.19 lakh for

the years 2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively for income

tax. The power business of DPL is not a separate entity for the assessment of

income tax. Its tax liability will depend on the overall taxable income of the

company as a whole. Till the time the income tax is assessed and the part of the

tax payable is identified pertaining to power business, the Commission cannot

allow any provision in this regard. However, in case, such tax payable is

identified pertaining to power business of DPL, provision is made in the accounts

and audited, on submission of conclusive documentary evidences with the

application for APR in succeeding years, the same will be taken care of as per

relevant regulation of the Tariff Regulations.

5.16 Interest on Consumers’ Security Deposits:

5.16.1 DPL has claimed Rs. 58.71 lakh, Rs. 64.58 lakh and Rs. 71.03 lakh for the years

2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively towards payment of

interest to the consumers on their security deposits. The projected amounts

under the head are allowed and allocated to distribution function.



5.16.2 DPL is directed to furnish reconciliation of payment for interest on consumers’

security deposit in line with the provision laid down under regulation 4.2.6 of the

West Bengal Electricity Regulatory Commission (Miscellaneous Provisions)

Regulations, 2013 along with actual booking of interest on consumers’ security

deposit in the annual accounts duly certified by the statutory auditors in the

submission of petition for APR for 2014 – 2015. Non compliance of the above

directions in the APR application for 2014 – 2015 will be viewed by the

Commission seriously and no amount under this head will then be allowed in

APR for 2014 – 2015 and onwards.

5.17 Reserve for unforeseen exigencies:

5.17.1 DPL has claimed Rs. 868.45 lakh, Rs. 954.80 lakh and Rs. 954.80 lakh for the

years 2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively towards

appropriation for the reserve for unforeseen exigencies in terms of regulation

5.11 of the Tariff Regulations.

5.17.2 In terms of the referred regulation, the Commission is thus allowing as per DPL

appropriations for creation of such reserves for the years under fourth control

period with the directives that investment of the amounts (including the arrears

for earlier years) must be done in accordance with the provisions of the Tariff

Regulations and the amounts of interest earnings thereon should not be taken as

income from non-tariff sources. For failure to comply with the provisions of the

referred regulation, double the amount allowed for the purpose will be deducted

from the amount of return on equity, allowed to DPL, during APR of any

succeeding years. Income from such investments of Reserve for Unforeseen

Exigencies shall be reinvested for the same purpose and shall be shown

separately in the application of APR or tariff, as the case may be, supported by

necessary audited data for any year. DPL is also directed to comply with the



directions given in para 3.16.6 to 3.16.8 of the APR order in case no. APR-40/13-

14 for the year 2012 – 2013 in all further submission of tariff petition. The

amounts allowed under this head are as under: Rupees in lakh Sl.No Particular As admitted by the Commission




5.17.3 Any amount of reserve for unforeseen exigencies however is not kept withheld

for reduction in the provisional project cost of Units VII & VIII for the reasons

mentioned at paragraph 5.2.1 (iii) and 5.2.2 of this order.

5.18 Return on Equity:

5.18.1 DPL has projected average equity base with reference to opening balance and

proposed addition during 2014 – 2015, 2015 – 2016 and 2016 – 2017 to the fixed

assets and considered return on equity @ 15.5% and 16.5% for generation and

distribution functions respectively for different years of the fourth control period

as shown below:

Rupees in lakh Return on Equity Base as Projected by DPL for generation function

Sl. No. Particular Average Equity Base as projected

by DPL Return on Equity Base as

projected by DPL 2014-15 2015-16 2016-17 2014-15 2015-16 2016-17

1 For Unit No. VI 29202.33 28829.40 28829.40 4526.36 4468.56 4468.56 2 For Unit No. VII 40500.00 40500.00 40500.00 6277.50 6277.50 6277.50 3 For Unit No. VIII 25495.50 33994.00 33994.00 3951.80 5269.07 5269.07 4 For distribution 15367.77 15367.77 15367.77 2535.68 2535.68 2535.68 5 Total 110565.60 118691.17 118691.17 17291.34 18550.81 18550.81



5.18.2 DPL has submitted that total equity received from Government of West Bengal till

2013 – 2014 against unit VIII is Rs. 19350.00 lakh. The Commission considers

the amount as the actual equity base at the beginning of the year 2014 – 2015.

5.18.3 Out of actual equity base of Rs. 89425.25 lakh for generating function at the

beginning of the year 2014 - 2015, Rs. 29575.25 lakh relates to equity base of

units III to VI, Rs. 40500.00 lakh to that of unit VII and Rs. 19350.00 lakh of unit

VIII, which is commissioned in October 2014. The units III, IV & V of DPL were

proposed for decommissioning and no generation from 2014 – 2015 onwards

has been projected by DPL. The value of equity for the remaining unit VI out of

Rs. 29575.25 lakh for the purpose of return, as stated in regulation 5.6.1.7 read

with regulation 5.6.1.5, shall be determined considering the value of equity of the

proposed inoperative units derived in terms of the formula laid down under

regulation 5.6.1.6(a) of the Tariff Regulations, as amended as under:

Where,

Eunit ═ Deemed Equity of inoperative unit under consideration.

Etot ═ Actual Equity against the concerned generating station.

Aunit ═ Age difference of the latest unit and the concerned inoperative unit.

IOunit ═ Installed capacity of the inoperative unit under consideration.

ICunitn ═ Installed capacity of the nth unit of the station.

Aunitn

E

═ Age difference of the latest unit and nth unit in completed year.

═ unit Etot X {IOunit X (0.9085)A

{ICunit}

unitn X (0.9085)Aunitn}



The units III, IV, V & VI were commissioned during the years 1964, 1964, 1966

and 1987 respectively. Deemed equity of the units proposed for

decommissioning is determined in the manner stated below:

Deemed equity for unit III (Eunit

Rs. 29575.25 lakh X {77X(0.9085)

) =

23

[77X(0.9085) }

+ 23 77X(0.9085) + 23 77X(0.9085) + 110X(0.9085)21 0

= Rs. 29575.25 lakh X 77 X 0.1100205 77 X .1100205 + 77 X .1100205 + 77 X 0.133298 + 110 X 1

= 250549.0528

8.4716 + 8.4716 + 10.2639 + 110

= 250549.0528 137.2071

= Rs. 1826.06 lakh

Deemed equity for unit IV (Eunit

(Rs. 29575.25 lakh – 1826.06 lakh) X {77X(0.9085)

) =

23

[77 X (0.9085) }

+ 23 77 X (0.9085) 21 + 110 X (0.9085)0

= Rs. 27749.19 lakh X 77 X 0.1100205 77 X 0.1100205 + 77 X 0.133298 + 110 X 1

= 235079.4414

128.7355

= Rs. 1826.06 lakh

Deemed equity for unit V (Eunit

(Rs. 29575.25 lakh – 1826.06 lakh – 1826.06) X {77X(0.9085)

) =

21

}

[77 X (0.9085) 21 + 110 X (0.9085)0

= Rs. 25923.13 lakh X 77 X 0.133298 77 X 0.133298 + 110



= 266073.6065 120.2639

= Rs. 2212.41 lakh

Therefore, the revised equity base of the remaining unit VI of DPL is arrived at

Rs. 23710.72 lakh (Rs. 29575.25 lakh - Rs. 1826.06 lakh - Rs. 1826.06 lakh - Rs.

2212.41 lakh).

5.18.4 The Commission now proceeds to determine the average equity base of DPL for

generating and distribution functions for the fourth control period. In terms of the

Tariff Regulations, returns on equity base are to be allowed @ 15.5% on

generating assets and 16.5% on distribution assets. Thus considering its

proportion of gross fixed assets of generation and distribution system at the

beginning and closing of the year, the equity base at its opening and closing of

the respective year has been arrived at. The detailed computation of the amounts

so arrived is shown in annexure 5C and 5D. Based on the computations shown

in annexure 5C and 5D, the average equity base for each year of 2014 – 2015,

2015 – 2016 and 2016 – 2017 for generating station and distribution system are

as below: Rupees in lakh

Admitted Average Equity Base Sl. No. Segment 2014 – 2015 2015 – 2016 2016 – 2017

1 Generation Unit – VI 23710.72 23710.72 23710.72 Unit - VII 40500.00 40500.00 40500.00 Unit - VIII 9675.00 19350.00 19350.00

Total 73885.72 83560.72 83560.72 2 Distribution system 15367.77 15367.77 15367.77 3 Overall 89253.49 98928.49 98928.49

5.18.5 It is to be clarified that equity base admitted for allowing returns as shown in the

referred annexure are computed for the prospective years and therefore, they

need adjustments subsequently on the basis of audited accounts. Such



adjustments will be carried out at the time of Annual Performance Review for the

concerned years.

5.18.6 The amounts of returns on equity allowable on above amounts of equity base

come as under after adjustments for Unit VII and Unit VIII in pursuance of

regulation 2.8.1.4.13 of the Tariff Regulations. Return against unit VIII for 2014 –

2015 is allowed to the extent of Rs. 1499.63 lakh because the unit was under

commercial operation for a period of 6 (six) months during the year.

Rupees in lakh Return on Equity as allowed in Tariff Order

2014-15 2015-16 2016-17 1 Generating Assets @

15.5% on average Equity base of generation segment

(a) For Units No. VI 3675.16 3675.16 3675.16 (b) For Unit No. VII Less: In pursuance of regulation 2.8.1.4.13 of the Tariff Regulations, as referred to in paragraph 5.2(i) of this order.

6277.50 (-) 313.88

6277.50 (-) 313.88

6277.50 (-) 313.88

Net Total for Unit No. VII 5963.62 5963.62 5963.62 c) For Unit No. VIII Less: In pursuance of regulation 2.8.1.4.13 of the Tariff Regulations, as referred to in paragraph 5.2(i) & 5.2(vi) of this order.

1499.63 (-) 74.98

2999.25 (-) 149.96

2999.25 (-) 149.96

Net Total for Unit No. VIII 1424.65 2849.29 2849.29 Total Generation 11063.43 12488.07 12488.07 2 Distribution assets @

16.5% on average equity base of distribution segment

Total Distribution 2535.68 2535.68 2535.68

Overall : 13599.11 15023.75 15023.75

5.18.7 The return on equity on account of the VIIth & VIIIth units of the generating

station will be withheld to the extent as mentioned in paragraph 5.2.1 and 5.2.2

for the reasons mentioned therein.



5.19 Interest on Working Capital:

5.19.1 DPL has asked for interest on normative working capital as under:

Rupees in lakh 2014-15 2015-16 2016-17 2152.77 2469.49 2637.33

5.19.2 In terms of regulations 5.6.5.1 of the Tariff Regulations, as amended working

capital requirement shall be assessed on normative basis @ 18% on the base

amount derived by summation of annual fixed charges and fuel and power

purchase cost reduced by the elements of the ARR determined, viz., depreciation

etc. as at paragraph 5.18.4. However, the above assessment of requirement of

working capital would be 10% instead of 18% on the base amount since DPL has

already introduced Monthly Fuel Cost Adjustment or Monthly Variable Cost

Adjustment for all the years, i.e., 2014 – 2015, 2015 – 2016 and 2016 – 2017.

5.19.3 DPL is directed to utilize the consumers’ security deposit lying with them in

working capital requirement. If there is any shortfall between the working capital

requirement and consumers’ security deposit held and DPL is required to take

working capital loan that will be taken care of during APR for the concerned year

as per provision of the Tariff Regulations. As per audited accounts for 2012 –

2013, total amount of consumers’ security deposit held by DPL as on 31.03.2013

is Rs. 640.07 lakh. Interest paid to consumers against security deposit during

2012 – 2013 is Rs. 38.96 lakh. DPL has been allowed interest on consumer

security to the extent of Rs. 58.71 lakh, Rs. 64.58 lakh and Rs. 71.03 lakh for

2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively as stated in paragraph

5.16.1 of the order. Thus, the normative requirement of working capital @ 10% of

the base amount is reduced by the security deposit held by DPL as on

31.03.2013 to arrive at the requirement of working capital. The interest on



working capital is considered @ 13.5% as claimed by DPL as the same is less

than the SBI PLR (14.45%) as on 01.04.2013.

5.19.4 As per their submission in Form 1.17(b), DPL has claimed the rate of interest @

13.50% per annum for all the years of the fourth control period. The interest on

working capital for generation function is worked out as under:

Sl. No. Particulars Amount in Rs. in lakh 2014-15 2015-16 2016-17

1 Annual Fixed charges now arrived excluding interest on working capital for generation function 54050.34 69718.94 68953.79

2 Fuel Cost as admitted 66368.54 82185.77 82185.77 3 Sub Total (1+2) 120418.88 151904.71 151139.56 Less:

4 Depreciation 9122.36 13382.20 13382.20 5 Advance against depreciation 2454.07 2556.16 2556.16 6 Deferred revenue expenditure 0.00 0.00 0.00 7 Return on Equity 11063.43 12488.07 12488.07 8 Bad and doubtful Debt 0.00 0.00 0.00 9 Reserve for Unforeseen Exigencies 478.29 903.21 903.21

10 Sub Total (4 to 9) 23118.15 29329.64 29329.64 11 Allowable Fixed Charges for working capital (3-10) 97300.73 122575.07 121809.92

12 Normative requirement of Working Capital (10% of 11) 9730.07 12257.51 12180.99

13 Security deposit held as on 31.03.2013 640.07 640.07 640.07

14 Requirement of working capital after utilizing the security deposit (12-13) 9090.00 11617.44 11540.92

15 Interest allowable @ 13.50% on 14 1227.15 1568.35 1558.02 16 Interest on working capital allowed 1227.15 1568.35 1558.02

5.19.5 The amounts of Rs. 1227.15 lakh, Rs. 1568.35 lakh and Rs. 1558.02 lakh for the

years 2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively are allocated to

generation function only.

5.19.6 During APR of the concerned year, the interest on working capital as above will

be reviewed on the amount assessed on normative basis considering the actual



security deposit held during the year or the actual amount of interest paid,

whichever is less, in respect of both generation and distribution function as per

regulation 5.6.5.2 of the Tariff Regulations.

5.20 Income from other Sources:

5.20.1 DPL has projected incomes from non-tariff sources as under: Rupees in lakh Sl. No. Particulars 2014-15 2015-16 2016-17

1 Rental of meters etc. 91.37 92.27 93.19 2 Sale and Repairs of meters and apparatus etc. 0.31 0.31 0.31 3 Income from investment & bank balances 76.96 77.73 78.50 4 Surcharge on late payments 284.30 287.15 290.02 5 Income from consumers’ job 0.00 0.00 0.00 6 Sale of steam 222.03 224.05 226.50 7 others 141.77 143.19 144.62 8 Total 816.74 824.70 833.14

5.20.2 The proposal of income from non-tariff sources of DPL has been admitted by the

Commission for all the three years under fourth control period with allocation of

the income between generation and distribution on the basis of the nature of the

income. The incomes from rental of meters and other apparatus, sale and repair

of meters and other apparatus, surcharge for late payment, income from jobs at

consumers’ premises and other general receipt have been considered in the

distribution head. Income from sale of steam and income from investments have

been considered in the generation head of units VI and VII. Accordingly, the

allocated amounts as admitted by the Commission are as follows: Rupees in Lakh

Income from Other Sources Sl.No Particular As Proposed by DPL and Admitted by the Commission






5.20.3 As can be noted from the above break-ups, DPL earns a considerable amount by

sale of steam from the power plants to other agencies. DPL was directed in the

tariff order under third control period and also in the APR order for 2011 – 2012

and 2012 – 2013 to disclose the names of the agencies and rate at which such

supplies are being made. But nothing has been disclosed so far including the

tariff petition for fourth control period. The Commission has taken a serious note

of such non-compliance. DPL is once again directed to comply with the directions

in all future submission. However, the projected amounts of incomes from non-

tariff sources are being admitted.

5.21 Interest Credit:

5.21.1 In terms regulation 5.5.3 of the Tariff Regulations, where the actual amount of

loan repayment in any year falls short of the depreciation allowable during the

year, then interest credit of such excess depreciation charges at the rate of

weighted average cost of debt is admissible. DPL has projected Rs.19.03 lakh,

Rs. 18.24 lakh and Rs. 18.24 lakh as interest credit to be refunded in ARR during

2014 – 2015, 2015 – 2016 and 2016 – 2017 respectively as chargeable

depreciation for Unit VI is more than the amount of loan repayable for those

years. As may be seen in the preceding paragraphs 5.10.2 and 5.10.3 that the

Commission has admitted advance against depreciation to DPL due to accrued

shortfall in amount of depreciation in repayment of the loan for all the years under

fourth control period in terms of the Tariff Regulations and hence the interest

credit is not considered.


ANNEXURE – 5A


Monthly Rate of Inflation in CPI number for Industrial Worker Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb March Average

2010-11 13.33 13.91 13.73 11.25 9.88 9.82 9.7 8.33 9.47 9.3 8.82 8.82 10.53 2011-12 9.41 8.72 8.62 8.43 8.99 10.06 9.39 9.34 6.49 5.32 7.57 8.65 8.42 2012-13 10.22 10.16 10.05 9.84 10.31 9.14 9.6 9.55 11.17 11.62 12.06 11.44 10.43 2013-14 10.24 10.68 11.06 10.85 10.75 10.7 11.06 11.47 9.13 7.24 6.73 6.70 9.72 2014-15 7.08 7.02 6.49 7.23 6.75 6.3 6.81 Source : Website of Labour Bureau, GOI : Average Value is being Computed

WPI FROM OFFICE OF ECONOMIC ADVISOR , GOI

Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2009-10 125.0 125.9 126.8 128.2 129.6 130.3 131.0 132.9 133.4 135.2 135.2 136.3

2010-11 138.6 139.1 139.8 141.0 141.1 142.0 142.9 143.8 146.0 148.0 148.1 149.5

2011-12 152.1 152.4 153.1 154.2 154.9 156.2 157.0 157.4 157.3 158.7 159.3 161.0

2012-13 163.5 163.9 164.7 165.8 167.3 168.8 168.5 168.8 168.8 170.3 170.9 170.1

2013-14 171.3 171.4 173.2 175.5 179.0 180.7 180.7 181.5 179.6 179.0 179.5 180.3

2014-15 180.8 182.0 183.0 184.6 185.7 185.0

Source : Website of Office of the Economic Advisor, GOI :

MONTHLY INFLATION RATE COMPUTED BASED ON WPI FROM OFFICE OF ECONOMIC ADVISOR , GOI

Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average

2010-11 10.88 10.48 10.25 9.98 8.87 8.98 9.08 8.20 9.45 9.47 9.54 9.68 9.57 2011-12 9.74 9.56 9.51 9.36 9.78 10.00 9.87 9.46 7.74 7.23 7.56 7.69 8.96 2012-13 7.50 7.55 7.58 7.52 8.01 8.07 7.32 7.24 7.31 7.31 7.28 5.65 7.36 2013-14 4.77 4.58 5.16 5.85 6.99 7.05 7.24 7.52 6.40 5.11 5.03 6.00 5.98 2014-15 5.55 6.18 5.66 5.19 3.74 2.38 4.78


ANNEXURE – 5B


TABLE - I ANNUAL ACTUAL FIGURE OF DIFFERENT BUISNESS PARAMETERS OF DPL DISTRBUTION FUNCTION HAVING IMPACT ON TARIFF

Sl No Particulars Units

Inflat

ionar

y Ba

sis

Sens

itivity

Pa

rame

ter &

de

gree

of

sens

itivity

2009-10 2010-11 2011-12 2012-13 2013-14

(Estimated by DPL)

2013-14 (Estimated by

WBERC)

1 Total consumers on 31st March number 39836 41735 43634 47244 48479 48479 2 Repair & Maintenance Expenditure Rs Lakh WPI+CPI DLL 715.96 1697.21 1091.29 1075.32 1801.07 1190.00 3 Auditors Fees Rs Lakh WPI+CPI DLL 3.86 0.65 0.66 0.67 0.74 0.68 4 Others Administrative and General Expenses Rs Lakh WPI+CPI CSM 337.61 318.16 543.85 585.59 602.31 602.31 5 Total Administrative & General Expenses(3+4) Rs Lakh 341.47 318.81 544.51 586.26 603.05 602.99 6 Total O&M Function Expenses (2+5) Rs Lakh 1057.43 2016.02 1635.80 1661.58 2404.12 1792.99 7 Rates & Taxes Rs Lakh WPI+CPI DLL 0.47 0.38 2.93 4.10 4.51 4.45 8 Insurance Rs Lakh WPI+CPI DLL 81.37 96.29 75.86 90.33 99.36 85.96 9 Total Rs Lakh 1139.27 2112.69 1714.59 1756.01 2507.99 1883.40

Tariff Order of CESC Limited for the year 2014 – 2015

West Bengal Electricity Regulatory Commission

93

TABLE-2 PROJECTED ANNUAL ESCALATION RATE COMPUTATION OF DIFFERENT PARAMETERS DURING FOURTH CONTROL PERIOD (2014-15 TO 2016-17)

Sl No Particulars

Inflat

ionar

y Bas

is

Sens

itivity

Pa

rame

ter &

de

gree

of se

nsitiv

ity

CAGR (%) between

Aver

age

Inflat

ion

Rate

durin

g the

Co

ncer

ned p

eriod

$

Whe

ther I

nflati

on

rate

is ap

plica

ble

Addit

ional

Gro

wth

Rate

abov

e infl

ation

ra

te

Ratio

of E

xpen

ses

incre

ase a

nd

sens

itivity

pa

rame

ter in

creas

e Escalation rate (%) for

Rem

arks

2012

-13 t

o 20

13-1

4

2011

-12 t

o 20

13-1

4

2010

-11 t

o 20

13-1

4

2014

-15

2015

-16

2016

-17

1 Total consumers increase 2.61 5.41 5.12 2.61 4.02 4.02 2 Repair & Maintenance Expenditure WPI+CPI DLL 10.66 1.72 -12.7 8.27 No 1.89 1.89 1.89 3 Auditors Fees WPI+CPI DLL 1.52 1.51 1.52 8.27 No 1.66 1.66 1.66

4 Others Administrative and General Expenses WPI+CPI CSM 2.86 5.24 23.71 7.48 No 5.76 5.76 5.76

5 Total Administrative & General Expenses(3+4) 4.38 6.75 25.23 7.42 7.42 7.42

6 Total O&M Function Expenses (2+5) 15.04 8.47 12.53 9.31 9.31 9.31 7 Rates & Taxes WPI+CPI DLL 8.48 23.24 127.09 7.48 Yes 1.00 0.38 7.09 9.67 9.67 8 Insurance WPI+CPI DLL -4.84 6.45 -3.71 8.27 No 7.10 7.10 7.10

Tariff Order of CESC Limited for the year 2014 – 2015


94

ANNUAL ACTUAL FIGURE OF DIFFERENT BUISNESS PARAMETERS OF DPL DISTRBUTION FUNCTION HAVING IMPACT ON TARIFF

Sl No Particulars Units

Projected expenses

for 2014-15 by DPL

Computed expenses for

2014-15 by the Commission

Admitted expenses

for 2014-15

Projected expenses

for 2015-16 by DPL

Computed expenses for 2015-16 by

the Commission

Admitted expenses

for 2015-16

Projected expenses

for 2016-17 by DPL

Computed expenses for 2016-17 by

the Commission

Admitted expenses

for 2016-17

1 Total consumers on 31st March number 49744 49744 49744 51743 51743 51743 51826 53823 53823

2 Repair & Maintenance Expenditure Rs Lakh 1327.25 1213.00 1213.00 1440.61 1236.00 1236.00 1565.29 1259.00 1259.00

3 Auditors Fees Rs Lakh 0.82 1.00 0.82 0.90 1.00 0.90 1.00 1.00 1.00

4 Others Administrative and General Expenses Rs Lakh 662.35 637.00 637.00 728.81 674.00 674.00 801.70 713.00 713.00

5 Total Administrative & General Expenses(3+4) Rs Lakh 663.17 638.00 637.82 729.71 675.00 674.90 802.70 714.00 714.00

6 Total O&M Function Expenses (2+5) Rs Lakh 1990.42 1851.00 1850.82 2170.32 1911.00 1910.90 2367.99 1973.00 1973.00

7 Rates & Taxes Rs Lakh 6.18 5.00 5.00 6.80 5.00 5.00 7.48 5.00 5.00 8 Insurance Rs Lakh 116.56 92.00 92.00 128.22 99.00 99.00 141.04 106.00 106.00 9 Total Rs Lakh 2113.16 1948.00 1947.82 2305.34 2015.00 2014.90 2516.51 2084.00 2084.00

Tariff Order of DPL for the year 2014-15

ANNEXURE – 5C COMPUTATION OF AVERAGE EQUITY BASE

FOR GENERATION FUNCTION


95

Rs. in lakh

Unit III to VI Unit VII Unit VIII Total Unit VI Unit VII Unit VIII Total Unit VI Unit VII Unit VIII Total

2 Delition of equity for decommissioning of Units III, IV & V (as per paragraph 5.18.3) -5864.53 0.00 0.00 -5864.53 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3Admissible equity base at the beginning of the year (1+2) 23710.72 40500.00 0.00 64210.72 23710.72 40500.00 19350.00 83560.72 23710.72 40500.00 19350.00 83560.72

5Actual equity base at the end of the year (1+2+4) 23710.72 40500.00 19350.00 83560.72 23710.72 40500.00 19350.00 83560.72 23710.72 40500.00 19350.00 83560.72

7 Normative addition to equity base (30% of 5) 0.00 0.00 50990.40 50990.40 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

9Admissible equity base considered at the closing of the year (3+8) 23710.72 40500.00 19350.00 83560.72 23710.72 40500.00 19350.00 83560.72 23710.72 40500.00 19350.00 83560.72

11 Allowable return @ 15.5% on 10 3675.16 6277.50 1499.63 11452.29 3675.16 6277.50 2999.25 12951.91 3675.16 6277.50 2999.25 12951.91

19350.00 83560.72

0.00 0.00 19350.00 19350.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

40500.00 19350.00 83560.72 23710.72 40500.0029575.25 40500.00 0.00 70075.25 23710.72

83560.72 83560.7223710.72 40500.009675.00 19350.00 19350.0023710.72 40500.00 73885.72 23710.72 40500.00

0.00 0.00 169968.00 0.00

0.000.00 0.00 19350.0019350.00

169968.00

0.00

0.00

0.00 0.00 0.00

0.00 0.000.000.00

0.000.00

0.00

0.00

0.00Net Addition to the original cost of fixed assets during the year

Addition to equity base considered for the year (lower of 4 and 7)

Average equity base for allowing returns (3+9)/2

Actual equity base at the beginning of the year1

4

6

8

10

Actual addition to equity base during the year

2014 - 2015 2015 - 2016 2016 - 2017 Sl. No. Particulars


ANNEXURE – 5D COMPUTATION OF AVERAGE EQUITY BASE

FOR DISTRIBUTION FUNCTION


96

Rs. in lakh

Sl. No. Particulars 2014 - 2015 2015 – 2016 2016 – 2017

1 Actual equity base at the beginning of the year. 15367.77 15367.77 15367.77

2 Admissible equity base at the beginning of the year 15367.77 15367.77 15367.77

3 Actual addition to / withdrawal of equity base during the year 0.00 0.00 0.00

4 Actual equity base at the end of the year (1+3) 15367.77 15367.77 15367.77

5 Net Addition to the original cost of fixed assets during the year as per Form 1.18 0.00 0.00 0.00

6 Normative addition to equity base (30% of 5) 0.00 0.00 0.00

7 Addition to equity base considered for the year (lower of 3 and 6) 0.00 0.00 0.00

8 Admissible equity base considered at the closing of the year (2+7) 15367.77 15367.77 15367.77

9 Average equity base for allowing returns (2+8)/2 15367.77 15367.77 15367.77

10 Allowable Return @ 16.5% 2535.68 2535.68 2535.68


CHAPTER – 6 SUMMARIZED STATEMENT OF

AGGREGATE REVENUE REQUIREMENT FOR THE YEARS 2014-15, 2015-16 & 2016-17

& REVENUE RECOVERABLE THROUGH TARIFF FOR THE YEAR 2014 – 2015


6.1 Based on the analyses and findings recorded in the foregoing chapters the

Commission is now drawing the statements of Aggregate Revenue

Requirements (ARR) separately for each of the three years of the third control

period covering the years 2014-15, 2015-16 and 2016-17. Such summarized

statements are given in Annexure 6A to 6C of this chapter.

6.2 In terms of the Tariff Regulations, it is also to ascertain the amount of revenue

recoverable through tariff for the year 2014-15 after carrying out adjustments of

the recoverable amount determined in Annual Performance Review (APR) for the

year 2012-13. The Commission in its APR order for 2012 – 2013 dated

21.05.2014 in Case No. APR-40/13-14 has determined the net amount of Rs.

14282.86 lakh recoverable by DPL from its consumers after taking into

consideration the adjustments in both variable costs and fixed costs. The

Commission now decides to adjust the net recoverable amount of 14282.86 lakh

determined in the APR for 2012 – 2013 with the ARR for 2014 – 2015 to

determine the revenue recoverable through tariff during 2014 – 2015. In addition

the income from sale of power by DPL to WBSEDCL has been considered after

taking into the selling rate at 380 paise / unit at 132 / 220 KV level and 395 paise

/ unit in the radial mode (33/11 KV) for all the three years of the fourth control

period. The adjustable amount of Rs. 14282.86 lakh for the year 2012 – 2013 are

being allocated to generation and distribution functions in proportion to ARR

determined for generation and distribution functions for the year 2014 – 2015.

Accordingly, the amount of revenue to be recovered through tariff for the year

2014 – 15 works out as under:

Tariff Order of DPL for the year 2011 – 2012 and 2012 – 2013


Rupees in Lakh REVENUE RECOVERABLE THROUGH TARIFF, CAPACITY CHARGES AND FIXED CHARGES

IN 2014-2015 Sl. No.

Particulars Generation Distribution Total

1 Aggregate Revenue Requirement for 2014-2015 121646.03 17682.28 139328.31

2 Adjustment for APR for 2012-2013 11811.37 2471.49 14282.86 3 Sub Total (1+2) 133457.40 20153.77 153611.17 4 Fuel Cost 66368.54 - - 5 Power Purchase Cost - 8745.08 - 6 Capacity Charges ( 6 = 3 - 4 ) 67088.86 - - 7 Fixed charges for Distribution (7 = 3 – 5) - 11408.69 -

6.3 The Commission has also worked out the average tariff for the consumers of

DPL for 2014-15 and the same is shown in the table below:

AVERAGE TARRIFF FOR CONSUMERS OF DPL in 2014 – 2015 Sl. No. Particulars Unit Total 1. Total revenue to be recovered through tariff Rs. Lakh 153611.17 2. Revenue from sale of power to WBSEDCL/other licensee Rs. Lakh 30474.45 3. Revenue Recoverable for supply of power to the consumers

(1-2) Rs. Lakh 123136.72

4. Energy sale to the consumers including inter-plant transfer MU 2467.19 5. Average tariff for the consumers (Sl.3 x 10 ÷ Sl. 4) Paisa/ kWh 499.10

6.4 The amount of revenue to be recovered through tariff, capacity charges and fixed

charges for the years 2015-16 and 2016-17 are also worked out as under:


IN 2015-2016 Sl. No. Particulars Generation Distribution Total


2 Fuel Cost 82185.77 - - 3 Power Purchase Cost - 11848.77 - 4 Capacity Charges (4 = 1 - 2 ) 71287.29 - - 5 Fixed charges for Distribution (5 = 1 – 4) - 9247.72 -




IN 2016-2017 Sl. No. Particulars Generation Distribution Total


2 Fuel Cost 82185.77 - - 3 Power Purchase Cost - 14339.14 - 4 Capacity Charges (4 = 1 - 2 ) 70511.81 - - 5 Fixed charges for Distribution (5 = 1 – 4) - 9404.80 -


ANNEXURE – 6A


100

2014 – 2015 2015 – 2016 2016 – 2017 ADMITTED ADMITTED ADMITTED

1 Fuel 66368.54 82185.77 82185.772 Employee Cost 6269.59 6838.23 7458.473 Centrally Maintained Exp 522.26 569.62 621.294 Coal and ash handling expenses 1637.82 2108.86 2214.315 Water Charges 2373.25 2913.73 2913.736 Operation & Maintenance expenses 4591.15 5609.80 6006.607 Rates & Taxes 5.00 5.00 5.008 Insurance 92.00 99.00 106.009 Depreciation 9122.36 13382.20 13382.20

10 Advance Against Depreciation 2454.07 2556.16 2556.1611 Write off of Intangible assets 0.00 0.00 0.0012 Interest on borrowed Capital 13892.70 20765.15 18890.2713 Interest on Working Capital 1227.15 1568.35 1558.0214 Other Finance Charges 1847.41 1781.69 1713.4815 Income tax 0.00 0.00 0.0016 Reserve for unforeseen exigencies 478.29 903.21 903.2117 ROE 11063.43 12488.07 12488.0718 Demurrage 0.00 0.00 0.0019 Development Fund 0.00 0.00 0.0020 Gross Revenue requirement ( 20 = sum 1 to 19) 121945.02 153774.84 153002.5821 Less Misc. other income 298.99 301.78 305.0022 Less: Interest Credit 0.00 0.00 0.0023 Net Total Revenue Required (23 = 20 – 21 - 22) 121646.03 153473.06 152697.58

GENERATION FIXED COST OF DPL (Rs. in lakh)Sl. No. PARTICULARS


ANNEXURE – 6B


101


1 Power Purchase Cost 8745.08 11848.77 14339.142 Employee Cost 2140.82 2335.00 2546.783 Centrally Maintained Expenses 214.08 233.50 254.684 Water Charges 0.00 0.00 0.00

Operation & Maintenance Expenses(a) Other Administrative & General Expenses. 637.00 674.00 713.00(b) Legal & professional Charges 0.00 0.00 0.00(c) Audit Fees 0.82 0.90 1.00(d) Repair & Maintenance including Consumables 1213.00 1236.00 1259.00

Total 1850.82 1910.90 1973.006 Interest on borrowed capital 1457.19 1338.75 1215.407 Interest on working capital 0.00 0.00 0.008 Other Finance Charges 56.39 40.40 24.549 Interest on consumers' security deposit 58.71 64.58 71.03

10 Depreciation 1089.67 1260.24 1260.2411 Advance against Depreciation 0.00 0.00 0.0012 Write off of Intangible assets 0.00 0.00 0.0013 Bad debts written off 0.00 0.00 0.0014 Reserve for unforeseen exigencies 51.59 51.59 51.5915 ROE 2535.68 2535.68 2535.6816 Gross Revenue requirement 18200.03 21619.41 24272.0817 Less Misc. other income 517.75 522.92 528.1418 Net Total Revenue Required 17682.28 21096.49 23743.94

Sl. No. Particulars

5

FIXED COST OF DISTRIBUTION FUNCTION OF DPL (RS. IN LAKH)


ANNEXURE – 6C


102


1 Fuel 66368.54 82185.77 82185.772 Power Purchase 8745.08 11848.77 14339.143 Employee Cost 8410.41 9173.23 10005.254 Centrally Maintained Exp 736.34 803.12 875.975 Coal and ash handling expenses 1637.82 2108.86 2214.316 Water Charges 2373.25 2913.73 2913.737 Operation & Maintenance expenses 6441.97 7520.70 7979.608 Rates & Taxes 5.00 5.00 5.009 Insurance 92.00 99.00 106.00

10 Depreciation 10212.03 14642.44 14642.4411 Advance Against Depreciation 2454.07 2556.16 2556.1612 Write off of Intangible assets 0.00 0.00 0.0013 Interest on borrowed Capital 15349.89 22103.90 20105.6714 Interest on Working Capital 1227.15 1568.35 1558.0215 Other Finance Charges 1903.80 1822.09 1738.0216 Bad Debts written off 0.00 0.00 0.0017 Income tax 0.00 0.00 0.0018 Interest on Consumers' Security Deposit 58.71 64.58 71.0319 Reserve for unforeseen exigencies 529.88 954.80 954.8020 ROE 13599.11 15023.75 15023.7521 Demurrage 0.00 0.00 0.0022 Development Fund 0.00 0.00 0.0023 Gross Revenue requirement ( 23 = sum 1 to 22) 140145.05 175394.25 177274.6624 Less Misc. other income 816.74 824.70 833.1425 Less: Interest Credit 0.00 0.00 0.0026 Net Total Revenue Required (26 = 23 – 24 - 25) 139328.31 174569.55 176441.52

Sl. No. PARTICULARS

TOTAL AGGREGATE REVENUE OF DPL (RS. IN LAKH)


CHAPTER - 7 TARIFF ORDER FOR 2014 – 2015


7.1 As mentioned in the previous chapter, the Commission, in accordance with the

Tariff Regulations, has determined for DPL the Aggregate Revenue Requirement

(ARR) for each year of the fourth control period, covering the years 2014-15 to

2016-17, and the revenue recoverable through tariff during 2014 – 2015 after all

the necessary adjustment as discussed in chapter 6. The tariff schedule

applicable to the consumers of DPL in 2014 – 2015 and the associated terms

and conditions given below are based on the category wise sale projected by

DPL for the year 2014 -2015. The Commission has observed that the projected

sales for 132 KV consumers during the year 2014 – 2015 are at a higher level

than that of previous year (about four times of actual sale to 132 KV consumers

during 2012 – 2013). On the other hand sale to consumers at 11 KV is projected

at a lower level than that of 2012 – 2013. These have caused reduction in

average rate at the existing tariff for 2013 – 2014. DPL has not given any reason

for such projection. The Commission has given necessary direction in this regard

in chapter – 8 of this order.

7.2 The tariff schedule as applicable to the consumers of DPL in the year 2014 –

2015 is given at Annexure - 7A1 for LV and MV consumers and at Annexure -

7A2 for HV and EHV consumers.

7.3 Details of different tariff schemes of different classes of consumers and various

associated terms and conditions are specified in various regulations and in

Annexure – C1 and Annexure – C2 of the Tariff Regulations. Other associated

conditions of the tariff for 2014 – 2015 shall be as follows.

7.3.1.1 In order to reduce the overall system T&D loss and to flatten the load curve by

improving the existing system load factor of DPL, the HT consumers shall receive

a voltage wise graded load factor rebate as per the following table:



LOAD FACTOR REBATE (Paise / KWH)

Range of Load Factor (LF) Supply Voltage 11 kV 33 kV 132 kV

Above 55% Up to 60% 1 2 3 Above 60% Up to 65% 2 3 4 Above 65% Up to 70% 3 4 5 Above 70% Up to 75% 10 11 12 Above 75% Up to 80% 12 13 14 Above 80% Up to 85% 14 15 16 Above 85% Up to 90% 16 17 18 Above 90% Up to 92% 18 19 20 Above 92% Up to 95% 22 24 25 Above 95% 25 27 28

7.3.1.2 The above load factor rebate shall be applicable on quantum of energy

consumed in a billing period (for example one 11 KV consumer at 85% load

factor shall be eligible for a rebate @ 14 paise / KWh on the total quantum of

energy consumed in a billing period).

7.3.1.3 Load factor surcharge shall continue at the prevailing rate for those categories of

consumers to whom these are applicable at present.

7.3.1.4 Load factor rebate and load factor surcharge shall be computed in accordance

with the formula and associated principles given in regulations 3.9.2, 3.9.3 and

3.9.4 of the Tariff Regulations and at the rates mentioned in paragraphs 7.3.1.1

and 7.3.1.3 above.

7.3.2.1 The fixed charge shall be applicable to different categories of consumers at the

rates as shown in Annexure 7A1 and Annexure 7A2 of this tariff order.

7.3.2.2 The demand charge shall be applicable to different categories of consumers as

per rates as shown in Annexure 7A1 and Annexure 7A2 of this order on the

basis of recorded demand as specified in regulation 4.3.3 of the Tariff

Regulations subject to the conditions as specified in the Tariff Regulations.

7.3.2.3 When a new consumer gets connected to the system, the computation of fixed

charge or demand charge for that month shall be made pro-rata for the number

of days of supply in that particular month.



7.3.3 Subject to the conditions as specified in regulation 4.13 of the Tariff Regulations,

the minimum charge shall continue at the existing level for all consumers.

7.3.4 The applicable rate of temporary supply for a consumer during the year 2014 -

2015 shall be the same rate at which he is being charged prior to issue of this

order.

7.3.5 For all consumers, excluding consumers having pre-paid meters, rebate shall be

given @ 1% of the amount of the bill excluding meter rent, taxes, duties, levies

and arrears (not being the arrears due to revision of tariff) if the payment is made

within the due date.

7.3.6 In addition to the rebate under paragraphs 7.3.5 above, if the payment is made

within due date, then an additional rebate of 1% of the amount of the bill

excluding meter rent, taxes, duties, levies and arrears (not being arrears due to

revision of tariff) would be allowed to the consumers who would pay their energy

bills through e-payment facility (through web by using net banking, debit card,

credit card, electronic clearing scheme) as introduced by DPL. This rebate is

applicable after giving effect under paragraphs 7.3.5. A rebate of Rs. 5.00 will be

admissible prospectively if any consumer opts for e-bill following regulation

3.1.10 of West Bengal Electricity Regulatory Commission (Electricity Supply

Code) Regulations, 2013. These rebates are applicable after giving effect under

paragraphs 7.3.5.

7.3.7.1 The power factor rebate and surcharge shall continue for those categories of

consumers to whom these are applicable at present. The rate of rebate and

surcharge and methods of calculation of such rebate and surcharge for the year

2014 – 2015 are given below:



7.3.7.2 The above rebate and surcharge against different time periods shall be reflected

in the bill separately and shall be treated separately.

7.3.8 For short-term supply, emergency supply and supply for construction power no

rebate or surcharge will be applicable for power factor and load factor.

7.3.9 Delayed payment surcharge shall be applicable as per regulation 4.14 of the

Tariff Regulations.

7.3.10 All existing charges relating to meter rent, meter testing, meter replacement, fuse

call charges, disconnection and reconnection etc. shall continue.

Power Factor (PF) Range

Power Factor Rebate & Surcharge on Energy Charge in Percentage for the year 2014-15

For Consumers under TOD Tariff For Consumers under non-TOD

Tariff Normal Period

(6.00 AM to 5.00 PM)

Peak Period (5.00 PM to 11.00

PM)

Off-peak Period (11.00 PM to 6.00

AM) Rebate

in % Surcharge in %

Rebate in %

Surcharge in %

Rebate in %

Surcharge in %

Rebate in %

Surcharge in %

PF > 0.99 7.00 0.00 8.00 0.00 6.00 0.00 5.00 0.00 PF > 0.98 & PF < 0.99 6.00 0.00 7.00 0.00 5.00 0.00 4.00 0.00 PF > 0.97 & PF < 0.98 5.00 0.00 6.00 0.00 4.00 0.00 3.00 0.00 PF > 0.96 & PF < 0.97 4.00 0.00 5.00 0.00 3.00 0.00 2.50 0.00 PF > 0.95 & PF < 0.96 3.00 0.00 4.00 0.00 2.00 0.00 2.00 0.00 PF > 0.94 & PF < 0.95 2.25 0.00 3.00 0.00 1.50 0.00 1.50 0.00 PF > 0.93 & PF < 0.94 1.50 0.00 2.00 0.00 1.00 0.00 1.00 0.00 PF > 0.92 & PF < 0.93 0.75 0.00 1.00 0.00 0.50 0.00 0.50 0.00 PF > 0.86 & PF < 0.92 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 PF > 0.85 & PF < 0.86 0.00 1.00 0.00 1.25 0.00 0.75 0.00 0.75 PF > 0.84 & PF < 0.85 0.00 2.00 0.00 2.50 0.00 1.50 0.00 1.50 PF > 0.83 & PF < 0.84 0.00 2.50 0.00 3.25 0.00 1.75 0.00 1.75 PF > 0.82 & PF < 0.83 0.00 3.00 0.00 4.00 0.00 2.00 0.00 2.00 PF > 0.81 & PF < 0.82 0.00 4.00 0.00 5.00 0.00 3.00 0.00 2.50 PF > 0.80 & PF < 0.81 0.00 5.00 0.00 6.00 0.00 4.00 0.00 3.00 PF <0.80 0.00 6.00 0.00 7.00 0.00 5.00 0.00 3.50



7.3.11 A consumer opting for pre-paid meter shall not be required to make any security

deposit on the energy charge.

7.3.12 All statutory levies like Electricity Duty or any other taxes, duties etc. imposed by

the State Govt. / Central Govt. or any other competent authority shall be extra

and shall not be a part of the tariff as determined in this order.

7.3.13 All the rates and conditions of tariff for 2014-15 are effective from 1st

7.3.14 For 2014-15 the consumer and other licensee shall have to pay/shall be refunded

the difference of the following two:

April 2014

and onwards except where specific date is mentioned. The rate will continue till

further tariff order of the Commission.

i) tariff as declared under this order for 2014-15, and

ii) what they actually already paid for the concerned period as tariff and the

MVCA, if any, for the concerned month.

Adjustments, if any, for over recovery / under recovery for 2014-15 from the

energy recipients shall be made in 20 (twenty) equal monthly installments

through subsequent energy bills and such adjustment will start from the energy

bills raised on or after 1st

7.3.15 There will be no separate monthly variable cost adjustment (MVCA) or Adhoc

FPPCA for DPL on and from 01.04.2014 to till the date of issue of this order. The

MVCA or Adhoc FPPCA realized by DPL during the year 2014-15 shall be

March, 2015 in respect of L&MV consumers. The

adjustment in respect of High and Extra High voltage consumers shall be made

in 20 (twenty) instalments through subsequent energy bills and will start from the

month immediately after completion month of recovery of arrear amount as per

tariff order 2013 – 2014.



adjusted in computation of any adjustments for over/under recovery from the

energy recipients as mentioned in paragraph 7.3.14 above.

7.3.16 In addition to the tariff determined under this tariff order, DPL would further be

entitled to additional sums towards enhanced cost of fuel and power purchase, if

any, after the date from which this tariff order takes effect. Thus DPL shall also

realize MVCA for any subsequent period after issuing of this order as per

provisions of the Tariff Regulations based on the tariff of this order. The fuel and

power purchase cost shall be subject to adjustment in accordance with the Tariff

Regulations through MVCA and/or FPPCA.

7.3.17 Optional TOD tariff scheme for LT Commercial, LT Industrial and LT Public

Water Works categories of consumers having minimum contract demand of 30

KVA, which was directed to be introduced in the tariff order for 2007-08, shall

continue and energy charge under such scheme shall be computed according to

regulation 4.12 of the Tariff Regulations, wherever applicable, if no tariff rates for

such consumers are mentioned in the tariff schedule.

7.3.18 For any pre-paid and TOD tariff scheme, other charges shall be the charges

applicable to consumers under respective category of non-TOD tariff.

7.3.20 An applicant for short term supply through pre-paid meter shall have to comply

with all necessary formalities for obtaining supply including payments in

accordance with the Regulations made by the Commission. The same will be

subject to the following conditions:

a) Provision of requisite meter security deposit to be kept with the licensee.

b) Provision of space for installing weather-proof, safe and secured terminal

services apparatus to protect sophisticated meter; and

c) Availability of prepaid-meter of appropriate capacity.



7.3.21 For a consumer with prepaid meter who has purchased voucher prior to the date

of issue of this order, the existing voucher will continue till such voucher is

exhausted.

7.3.22 To avail the rate for street lighting with LED [(Rate D (2)], the supply should be

metered and all the street lights under the same meter shall be illuminated with

LED. For mixed type of street lights under single meter the rate D(1) shall be

applicable.

7.3.23 The tariffs determined under this order for different categories of consumers are

the maximum ceilings for supply of electricity at any agreed price to the

consumers only for those areas of supply of DPL where multiple licensees exist.

However, if supply is effected to a consumer at a price lesser than the upper

ceiling, and as a result the licensee incurs loss, such loss shall not be allowed to

be passed on to any other consumers or any other distribution licensees of the

Commission.

7.3.24 Energy sale rate of DPL to WBSEDCL during the year 2014 – 2015 and onwards

shall be as per the rate approved in the tariff order of WBSEDCL for the year

2014-2015 in case no. TP – 61 / 13 – 14 for purchase of power by WBSEDCL

from DPL.

7.3.25 Any matter, which has not been explicitly mentioned in this order, shall be guided

by regulations 2.9.8 and 2.9.9 of the Tariff Regulations.

7.4 It is open to the State Government to grant any subsidy to any consumer or any

class of consumers in the tariff determined by the Commission for DPL. If at all

any such subsidy under the provisions of the Act is intimated to DPL and to the

Commission by the Government of West Bengal with clear indication of the

consumer or class of consumers to be subsidized and the amount of the subsidy



proposed to be given is paid in advance, the tariff of such consumer and / or the

class of consumers shall be deemed to have been reduced accordingly as has

been indicated by the State Government. However, such direction of the State

Government shall not be operative till the payment is made by the State

Government in accordance with the provisions of the Act and the Regulations

made thereunder and the tariff as fixed by the Commission shall remain

applicable. In accordance with the Tariff Regulations, the State Government is

required to communicate, within 15 days from the date of receipt of a tariff order,

whether it shall give any subsidy to any group of consumers etc.

7.5 DPL shall present to the Commission a gist of this order in accordance with

regulation 2.9.6 of the Tariff Regulations within three working days from the date

of receipt of this order for approval of the Commission and on receipt of the

approval shall publish the approved gist in terms of aforesaid regulation within

four working days from the date of receipt of the approval of the Commission.

Tariff Order of DPL for 2014-15

Annexure -7A1


Energy Charge P/kwh

Fixed Charge/ Demand

Charge* in Rs/KVA/

mon

Name of the Tariff Scheme

Energy Charge P/kWh


Charge* in Rs/KVA/

mon

Consumer category



Charge* in Rs/KVA/

mon

1. Life Line

Consumer (Domestic)

250 5

First 25 345

Next 25 420

Next 50 435

Next 100 467

First 60 431 453

Next 40 472 498

Next 200 492

above 300 50506.00 hrs to 17.00

hrsAll units 313 All units 305

17.00 hrs to 23.00

hrs.All units 626 All units 610

23.00 hrs to 06.00

hrsAll units 172 All units 168

LOW AND MEDIUM VOLTAGE CONSUMERS

Optional tariff SchemeOptional Tariff Scheme - II

Type of Consumer

Monthly consumption in

KWH

Energy Charge P/kWh


KWH

Applicable Tariff Scheme

Consumer category

Consumer category

NOT APPLICABLE

0 to 25

10 All Units 418

NOT APPLICABLE

10Rate

C(3R)pp/ C(3U)pp

Prepaid


Optional Tariff Scheme – IMonthly consumption in

KWH

Normal

300 499

3. 20

Next 100 486

2. Rate

C(3R)/ C(3U)

Normal

Rate C(4-R) / C(4-U)

Normal

Rate C(5t)

Rate C(4-R)pp/C(4-U)pp

20Normal TOD 20

Commercial (Rural) or

Commercial (Urban)

Irrigation pumping for Agriculture

06.00 hrs to 17.00 hrs

17.00 hrs to 23.00 hrs.

23.00 hrs to 06.00 hrs

Sl No

Rate C(5)4.

NOT APPLICABLE

Domestic (Rural) or Domestic (Urban)

Above

Pre-Paid TOD

23.00 hrs to 06.00 hrs. 417

20

06.00 hrs to 17.00 hrs06.00 hrs to 17.00 hrs

Normal TOD 20

448

421

17.00 hrs to 23.00 hrs. 493

NOT APPLICABLE

17.00 hrs to 23.00 hrs.

Rate C(4-

R)ppt/C(4-U)ppt

Prepaid- TOD

23.00 hrs to 06.00 hrs.


Annexure -7A1


Energy Charge P/kwh


Charge* in Rs/KVA/

mon


Energy Charge P/kWh


Charge* in Rs/KVA/

mon

Consumer category



Charge* in Rs/KVA/

mon



Type of Consumer


KWH

Energy Charge P/kWh


KWH


Consumer category

Consumer category



KWHSl No

06.00 hrs to 17.00

hrsAll units 477

17.00 hrs to 23.00

hrs.All units 760

23.00 hrs to 06.00

hrsAll units 315

06.00 hrs to 17.00

hrsAll units 432

17.00 hrs to 23.00

hrs.All units 691

23.00 hrs to 06.00

hrsAll units 285

06.00 hrs to 17.00

hrsAll units 482

17.00 hrs to 23.00

hrs.All units 771

23.00 hrs to 06.00

hrsAll units 318

40

40 NOT APPLICABLE

Prepaid- TOD NOT APPLICABLE

20Short Term Irrigation Supply

Short Term supply for

Commercial Plantation

Rate C(5)-stis

Rate C(4)-stcp

5. Commercial Plantation

Rate C(4) cp

Prepaid- TOD

7.

6. Prepaid- TOD NOT APPLICABLE NOT APPLICABLE

NOT APPLICABLE

NOT APPLICABLE


Annexure -7A1


Energy Charge P/kwh


Charge* in Rs/KVA/

mon


Energy Charge P/kWh


Charge* in Rs/KVA/

mon

Consumer category



Charge* in Rs/KVA/

mon



Type of Consumer


KWH

Energy Charge P/kWh


KWH


Consumer category

Consumer category



KWHSl No

06.00 hrs to 17.00

hrsAll units 532

17.00 hrs to 23.00

hrs.All units 585

23.00 hrs to 06.00

hrsAll units 495

On all units

On all units

On all units

On all units

On all units

In Municipal Area/ Non-

Municipal Area

On all units

First 100 419 All units 434

Next 200 477 All units 477

Above 300 489 All units 40423.00 hrs to 06.00 hrs

06.00 hrs to 17.00 hrs

23.00 hrs to 06.00

hrs

491451Rate

C(2-U)

NOT APPLICABLE

Prepaid 24Rate C(2-U)pp On all UnitsOn all Units

Public utility /Specified Institution

Public Bodies

Rate C(sts)

Rate C(4 - ii)

40

Normal 12

Prepaid - TOD

24Normal

8. Short-term Supply

10.

Cottage Industry / Artisan /

Weavers / Small production

oriented establishment

9.

11. NOT APPLICABLE

462

Rate C(4 -ii) ppt

Prepaid - TOD

17.00 hrs to 23.00 hrs

Rate C (2-U) ppt

Prepaid TOD

NOT APPLICABLE

446

24

415

17.00 hrs to 20.00

hrs.

06.00 hrs. – 17.00 hrs. &

20.00 hrs - 23.00 hrs.

NOT APPLICABLE

12

Government School,

Government aided School

and Government sponsored

School

Rate C(GS) Normal On all Units 341 20370

326

Rate C(GSt)

Normal TOD

06.00 hrs. – 17.00 hrs. & 20.00 hrs - 23.00 hrs.

2017.00 hrs to 20.00 hrs.

23.00 hrs to 06.00 hrs

336


Annexure -7A1


Energy Charge P/kwh


Charge* in Rs/KVA/

mon


Energy Charge P/kWh


Charge* in Rs/KVA/

mon

Consumer category



Charge* in Rs/KVA/

mon



Type of Consumer


KWH

Energy Charge P/kWh


KWH


Consumer category

Consumer category



KWHSl No

First 100 428 All units 444

Next 200 443 All units 488

Above 300 490 All units 413

All Units 453

All Units 602

All Units 340

First 500 476 All Units 480

All Units 634

All Units 360

15. Street Lighting Rate D(1) 438 30

06.00 hrs to 17.00 hrs

17.00 hrs to 23.00 hrs

23.00 hrs to 06.00 hrs

06.00 hrs. – 17.00 hrs. & 20.00 hrs -

23.00 hrs.

NOT APPLICABLE

17.00 hrs to 20.00 hrs.

23.00 hrs to 06.00 hrs

Prepaid - TOD

30

06.00 hrs to 17.00 hrs

17.00 hrs to 23.00 hrs

23.00 hrs to 06.00 hrs

Rate C(4 -iii)ppt12

Rate B (II) Normal On all Units

Public Water Works &

Sewerage System

12.

13.

Poultry, Duckery, Horticulture,

Tissue culture, Floriculture,

Herbal – Medicinal – Bio-

diesel Plant Farming, Food

Processing Unit

Rate C(4 -iii) Normal

Rate C(1) Normal

30

NOT APPLICABLE

462 NOT APPLICABLE

12

Rate B (II)ppt 30

Prepaid - TOD

NOT APPLICABLE

Normal On all Units

14.

Industry (Rural) or Industry (Urban) Above 500 487

30 Rate C(1t)

Normal - TOD

NOT APPLICABLE


Annexure -7A1


Energy Charge P/kwh


Charge* in Rs/KVA/

mon


Energy Charge P/kWh


Charge* in Rs/KVA/

mon

Consumer category



Charge* in Rs/KVA/

mon



Type of Consumer


KWH

Energy Charge P/kWh


KWH


Consumer category

Consumer category



KWHSl No

16 Street Lighting (LED)

Rate D(3) 374 30

On all Units 487

On all Units 536

On all Units 453

06.00 hrs to 17.00

hrs

On all Units 614

17.00 hrs to 23.00

hrs

On all Units 810

23.00 hrs to 06.00

hrs

On all Units 461

06.00 hrs. – 17.00

hrs. & 20 .00 hrs to 23.00 hrs

On all Units 494

17.00 hrs to 20.00

hrs.

On all Units 627

23.00 hrs to 06.00

hrs

On all Units 420

NOT APPLICABLE

40 NOT APPLICABLE

30Rate D(5)t

NOT APPLICABLE

18.

Construction Power Supply19.

Rate D(6)

24

Prepaid- TOD

Prepaid-TOD

Emergency Supply

Rate D(7)

Rate D(5)

NOT APPLICABLE

30 17.00 hrs to 20.00 hrs

23.00 hrs to 06.00 hrs

Normal TOD

NOT APPLICABLE

06.00 hrs to 17.00 hrs & 20.00 hrs to

23.00 hrs

On all Units17.

Private Educational Institutions

and Hospitals

Normal 497

On all UnitsNormal

NOT APPLICABLE

NOT APPLICABLE


Annexure -7A1


Energy Charge P/kwh


Charge* in Rs/KVA/

mon


Energy Charge P/kWh


Charge* in Rs/KVA/

mon

Consumer category



Charge* in Rs/KVA/

mon



Type of Consumer


KWH

Energy Charge P/kWh


KWH


Consumer category

Consumer category



KWHSl No

On all Units 404

On all Units 444

On all Units 376

06.00 hrs. – 17.00

hrs. & 20 .00 hrs to 23.00 hrs

On all Units 465

17.00 hrs to 20.00

hrs.

On all Units 614

23.00 hrs to 06.00

hrs

On all Units 349

21.

20

30Rate D(8)

Rate D(2)

Prepaid - TOD

Common Services of Industrial

Estate

Normal

Bulk Supply at single point to Co-operative

Group Housing

Society for providing

power to its members or person for providing

power to its employees in a

single premises

20.

06.00 hrs to 17.00 hrs

All units 409

NOT APPLICABLE NOT APPLICABLE

NOT APPLICABLENormal - TOD 20

23.00 hrs to 06.00 hrs

Rate D(2t)

17.00 hrs to 23.00 hrs


Annexure-7A2


Demand Charge

Demand Charge

(Rs./ KVA/ month)

(Rs./ KVA/ month)

Summer Monsoon Winter Summer Monsoon Winter

06.00 hrs-17.00 hrs

&20.00 hrs-23.00 hrs

17.00 hrs-20.00 hrs All Units 443 441 439

23.00 hrs-06.00 hrs All Units 375 373 371

06.00 hrs-17.00 hrs

&20.00 hrs-23.00 hrs

17.00 hrs-20.00 hrs All Units 438 436 433

23.00 hrs-06.00 hrs All Units 370 368 366

06.00 hrs-17.00 hrs All Units 490 488 486

17.00 hrs-23.00 hrs All Units 576 573 571

23.00 hrs- 06.00 hrs All Units 417 415 413

06.00 hrs-17.00 hrs

All Units 480 478 476

17.00 hrs-23.00 hrs

All Units 564 562 559

23.00 hrs- 06.00 hrs

All Units 408 406 405

Sl No

Type of Consumer


1 Normal All Units 405Public Utility (11 KV)

Optional Tariff Scheme

Consumer category

Name of the Tariff

Scheme

Consumption per month in KWH

Energy Charge

P/kWh

Consumer category


394

Rate F(2t)Rate F(2) 320398

320 Rate A(1t) TOD

320Normal - TOD

Energy Charge

401 399

320

Name of the Tariff

Scheme

Normal - TOD

All Units 398 396

3

4 Rate F(1a)

320Normal All Units 494 492 490

Normal -TOD

320

Rate A(1a)

Rate A(2)

Public Utility (33 KV)

401

396Normal All Units 4002

403

HIGH & EXTRA HIGH VOLTAGE CONSUMERS

Industries (11 KV)

Industries (33 KV)

P/kWh

Rate A(2t)

320

All Units 403

NOT APPLICABLE


Annexure-7A2


Demand Charge

Demand Charge

(Rs./ KVA/ month)

(Rs./ KVA/ month)


Sl No

Type of Consumer



Consumer category

Name of the Tariff

Scheme


Energy Charge

P/kWh

Consumer category


Energy ChargeName of the Tariff

Scheme


P/kWh

06.00 hrs-17.00 hrs

All Units 471 469 467

17.00 hrs-23.00 hrs

All Units 553 551 549

23.00 hrs- 06.00 hrs

All Units 400 399 397

06.00 hrs-17.00 hrs

All Units 444 442 440

17.00 hrs-23.00 hrs

All Units 799 796 792

23.00 hrs- 06.00 hrs

All Units 293 292 290

06.00 hrs-17.00 hrs

All Units 446 444 442

17.00 hrs-23.00 hrs

All Units 714 710 707

23.00 hrs- 06.00 hrs

All Units 294 293 292

06.00 hrs-17.00 hrs

All Units 466 464 462

17.00 hrs-23.00 hrs

All Units 746 742 739

23.00 hrs- 06.00 hrs

All Units 308 306 305

5

6Community Irrigation/ Irrigation

Normal - TOD

8 Rate S(stis)

Rate G(1a)

25Short Term Irrigation Supply

Normal - TOD

Commercial Plantation Rate S(cpt) Normal -

TOD

25Rate S(gt)

3207

Normal -TOD 320Industries

(132 KV) NOT APPLICABLE

NOT APPLICABLE

NOT APPLICABLE

NOT APPLICABLE


Annexure-7A2


Demand Charge

Demand Charge

(Rs./ KVA/ month)

(Rs./ KVA/ month)


Sl No

Type of Consumer



Consumer category

Name of the Tariff

Scheme


Energy Charge

P/kWh

Consumer category



Scheme


P/kWh

06.00 hrs-17.00 hrs

All Units 451 449 447

17.00 hrs-23.00 hrs

All Units 722 718 715

23.00 hrs- 06.00 hrs

All Units 298 296 295

06.00 hrs-17.00 hrs All Units 499 494 489

17.00 hrs-23.00 hrs All Units 659 652 645

23.00 hrs- 06.00 hrs All Units 359 356 352

06.00 hrs-17.00 hrs All Units 490 485 480

17.00 hrs-23.00 hrs All Units 647 640 634

23.00 hrs- 06.00 hrs All Units 358 354 350

06.00 hrs-17.00 hrs All Units 460 455 450

17.00 hrs-23.00 hrs All Units 607 601 594

23.00 hrs- 06.00 hrs All Units 345 341 338

9

Short Term Supply for

Commercial Plantation

Normal - TOD 320

495Commercial (33 KV) Rate F(3)

495All UnitsNormal

475Commercial (132 KV)

NOT APPLICABLE

320

320

Normal - TOD

All Units

320505

12

Commercial (11 KV) Rate A(3) 500

Normal All Units

Normal - TOD

Normal - TOD

Rate G(3)

11 Normal

10

473 471

Rate A(3t)

Rate F(3t)

Rate G(3t)

493 491

320

320

Rate S(stcp)

320


Annexure-7A2


Demand Charge

Demand Charge

(Rs./ KVA/ month)

(Rs./ KVA/ month)


Sl No

Type of Consumer



Consumer category

Name of the Tariff

Scheme


Energy Charge

P/kWh

Consumer category



Scheme


P/kWh

06.00 hrs-17.00 hrs All Units 459 457 455

17.00 hrs-23.00 hrs All Units 505 503 501

23.00 hrs- 06.00 hrs All Units 427 425 42306.00 hrs-17.00 hrs

&20.00 hrs-23.00 hrs17.00 hrs-20.00 hrs All Units 565 558 552

23.00 hrs-06.00 hrs All Units 312 309 305

06.00 hrs-17.00 hrs &

&20.00 hrs-23.00 hrs

17.00 hrs-20.00 hrs

All Units 562 553 557

23.00 hrs-06.00 hrs

All Units 320 314 317

422

14 Rate E (pw)


Sewerage (11 KV)


Sewerage (33 KV)

All Units 465 463 461

446

All Units

450Rate S(c ) Normal All Units

Normal All Units

Normal - TOD

13 Domestic Rate S(d) Normal

320

Normal - TOD 25Rate

S(dt)

Rate E(pwt)

25

15 Rate F(pw)

428

426 419

439 Normal - TOD320437 435

44816

Sports Complex &

Auditorium run by Govt./ local

bodies for cultural affairs

320

NOT APPLICABLE

418423

NOT APPLICABLE

All Units

34


Annexure-7A2


Demand Charge

Demand Charge

(Rs./ KVA/ month)

(Rs./ KVA/ month)


Sl No

Type of Consumer



Consumer category

Name of the Tariff

Scheme


Energy Charge

P/kWh

Consumer category



Scheme


P/kWh

06.00 hrs-17.00 hrs All Units 441 438 43517.00 hrs-23.00 hrs All Units 582 578 574

23.00 hrs- 06.00 hrs All Units 322 320 318

06.00 hrs-17.00 hrs

All Units 510 500 490

17.00 hrs-23.00 hrs

All Units 714 700 686

23.00 hrs- 06.00 hrs

All Units 383 375 368

06.00 hrs-17.00 hrs & 20.00 hrs.- 23.00 hrs

All Units 432 422 412

17.00 hrs-20.00 hrs

All Units 570 557 544

23.00 hrs-06.00 hrs

All Units 315 308 301

06.00 hrs-17.00 hrs

All Units 440 437 434

17.00 hrs-23.00 hrs

All Units 484 481 477

23.00 hrs- 06.00 hrs All Units 409 406 404

447

25

320

438

320

441All Units 444

451 Rate A(4-pit)

Normal - TOD

Rate S(cot)

NOT APPLICABLE

NOT APPLICABLE

449All Units

Construction Power Supply Rate S(con)19

17

Normal-TOD

NormalCold storage or

Dairy with Chilling Plant

(11 KV)

Rate A(4-pi)

Normal-TOD

20

Bulk Supply at single point to Co-operative Group

Housing Society for providing power to

its members or person for providing

power to its employees in a single premises

NormalRate S(co)

18 Emergency Supply Rate S (ES)

25

320

Normal - TOD

320


Annexure-7A2


Demand Charge

Demand Charge

(Rs./ KVA/ month)

(Rs./ KVA/ month)


Sl No

Type of Consumer



Consumer category

Name of the Tariff

Scheme


Energy Charge

P/kWh

Consumer category



Scheme


P/kWh

443 433 423

585 572 558

332 325 317

22 Traction (25 KV) Rate T (a) Normal 480 470 460 320

23 Traction (132 KV) Rate T (b) Normal 475 465 455 320

06.00 hrs-17.00 hrs

All Units 490 488 486

17.00 hrs-23.00 hrs

All Units 539 537 535

23.00 hrs- 06.00 hrs

All Units 456 454 452

06.00 hrs-17.00 hrs All Units 462 457 452

17.00 hrs-23.00 hrs All Units 508 503 497

23.00 hrs- 06.00 hrs All Units 430 425 420

26 Inter Plant Transfer Rate IPT Normal 499.10 499.10 499.10 0

320

06.00 hrs-17.00 hrs & 20.00 hrs.- 23.00

hrs

24 Short-term Supply

Normal - TOD

17.00 hrs-20.00 hrs

All Units

All Units

Rate S(st)

23.00 hrs-06.00 hrs

21Common

Services of Industrial

Estate

Rate – E (ict) Normal - TOD

NOT APPLICABLE

NOT APPLICABLE

NOT APPLICABLE

320

Rate E (eit) Normal - TOD 320320

NOT APPLICABLE

25Private

Educational Institutions

Rate E (ei) Normal

All Units NOT APPLICABLE

480 475 470All Units


CHAPTER - 8 DIRECTION


8.1 The Commission has given some direction in different paragraphs in Chapter-4

and Chapter-5 of this order while determining the fuel cost and fixed cost of DPL.

DPL shall comply with those directions. DPL shall also comply with the following

directions:

8.2 In view of the fact that DPL failed to submit their tariff application complete in all

respect for the fourth Control period within the target date of 30th November,

2013 as per provisions of the Tariff Regulations, for the said period no carrying

cost has been and will be provided for the enhanced part of the tariff during

2014-15.

8.3 The Commission has decided that in future any delay in submission of tariff

application by any distribution licensee for any control period beyond the 4th

Further, it is also required to be noted that any delay with or without the approval

of the Commission in submission of either of the applications of APR or FPPCA

of any year (Y) within the target date as specified in the Tariff Regulations of the

following year may result into non-inclusion of the impact of APR and/or FPPCA

order in the concerned tariff order of the year Y+2. In such case, the impact will

be considered in any future year beyond (Y+2) year as applicable without any

allowance for carrying cost, if otherwise applicable. Thus, in filing of

control period or any year as applicable, will result in not providing any increase

in tariff for equal number of days and thus the under recovery due to such

measure will not be allowed to be passed through any tariff mechanism or during

truing up in Annual Performance Review (APR) or Fuel & Power Purchase Cost

Adjustment (FPPCA). Moreover, henceforth any delay in submission in APR or

FPPCA application shall not be considered as ground for delay by the licensee

for submission of tariff application.



application(s) / petition(s), the licensee is required to maintain the relevant time

schedule(s) as specified in the Tariff Regulations.

It may be further noted that the arrear amount that is to be recovered in a single

or number of installments as will be determined by the Commission for any

financial year due to issuance of delayed tariff order as consequence to delayed

submission of tariff application by the licensee will not be provided with any

carrying cost. Further such matter will be dealt as per direction already issued by

the Commission vide its order in Case no. SM-10/14-15 dated 18.07.2014.

The Commission also observed that during truing up in the APR order of the

distribution licensees and in the Fuel Cost Adjustment (FCA) of the generating

company, a considerable amount is further recoverable by the licensees and the

generating company even after realization of MVCA or MFCA during the year. It

appears that the distribution licensees and the generating company have failed to

understand the true spirit of introduction of the MVCA and MFCA and they are

not considering the eligible cost in computation of their MVCA or MFCA as per

the formula specified in the Tariff Regulations properly. The Commission in terms

of regulation 5.8.12 of the Tariff Regulations directs DPL to compute their MVCA

taking into consideration the related cost in its true sense keeping in their mind

the true spirit of introduction of such monthly adjustment failing which the

Commission will think not to allow such adjustment in full in future or not to pass

the amount as found recoverable on account of FPPCA during truing up in APR

for DPL.

8.4 DPL shall note that as already MVCA has been introduced, the amount that be

claimed in FPPCA at the end of any year is not expected to be higher than the

summated value of following factors:



i) impact due to rounding off as per note (f) under the sub- paragraph (d) of

paragraph (A) of Schedule - 7B of the Tariff Regulations against the

applicable MVCA for the month of February and March of that year;

ii) impact due to non-recovery of any additional fuel cost of March of any year

over and above what is recovered on the basis of MVCA as calculated from

data of February due to the fact that MVCA calculated on the basis of

data of March becomes applicable for next financial year only,

iii) impact due to application of disallowance of cost as per FPPCA formula at

FPPCA determination stage.

Thus, in such case if recoverable amount under FPPCA of any year is found to

be higher than the above referred summated value then such excess amount

will be dealt as per direction already issued by the Commission vide its order in

case no. SM-10/14-15 dated 18.07.2014. In this context it is to be noted that

such excess amount represent the amount that would have been collected

through MVCA and thus “not raising of such bill” resulted into distorted merit

order dispatch in the system. In fact by virtue of this type of practice there is high

possibility of vitiating the environment of merit order dispatch in the whole supply

chain in West Bengal power sector and thereby affecting the economic load

dispatch in the systems. As a result ultimate sufferer will be the retail consumers

of West Bengal. In view of the above discussions no carrying cost will be

allowed by the Commission in case of creation of such excess amount as

regulatory asset through FPPCA. Whenever such excess amount is released in

number of installments then also it will not be entitled to any carrying cost.

However, this direction shall not be construed as an approval of such delayed

claim of excess fuel cost through FPPCA instead of MVCA and such matter will

be dealt as per direction already issued by the Commission vide its order in case

no. SM-10/14-15 dated 18.07.2014.



8.5 While declaring MVCA for any month henceforth DPL shall follow the following

directions:

i) Irrespective of change in MVCA in any month from the previous month, the

detail calculation sheet of MVCA prepared for the purpose of determination

of MVCA for that month as per regulation 5.8.9 of the Tariff regulations shall

be submitted to the Commission within seven days of notification of the

MVCA or in case of no notification within thirty days after the end of the

month under consideration for MVCA. Such calculation sheet shall also

specifically mention the received fuel bill which has not been considered or

partly considered in the said MVCA in pursuance to note (g) under sub-

paragraph (e) of paragraph A of Schedule – 7B of the Tariff Regulations.

DPL shall also upload such calculation sheet in their web-site for each

month and shall maintain till three months after the date of publication of

APR order of the concerned year.

ii) In continuation of earlier order vide case no. WBERC/A-35/2 dated 19-02-

2014 Commission again reiterated that DPL will publish the notification of

change of MVCA in terms of 4th

8.6 While submitting the Fuel and Power Purchase Cost Adjustment (FPPCA)

application for any year DPL shall give a list of fuel bill or power purchase bill

which has not been claimed under MVCA calculation along with the provisions of

the Tariff Regulations under which such claim has not been done. A further

reconciliation statement shall be given to establish that DPL has followed the

direction of paragraph 8.4 and. 8.5 above effectively. In case of non submission

of the above documents/ information the application of APR will not be admitted.

paragraph of regulation 5.8.9 of Tariff

Regulations in such daily newspapers which are widely circulated in West

Bengal .Any deviation in this regard will be seriously viewed.



8.7 While computing the renewable and cogeneration purchase obligations, the

energy generated from Solar roof-top photovoltaic power plants shall be

considered by any distribution licensee both on consumption side and as input

energy from renewable sources towards fulfillment of renewable and

cogeneration purchase obligations in terms of the Electricity Act, 2003 and the

relevant Regulations. The licensee is required to furnish suitable details in this

respect.

8.8 DPL shall submit a report within 01.10.2015 on the following issues:

i) Implementation problem in removing minimum 30 KVA load criterion on

eligibility for TOD conversion.

ii) Possibility of shifting of load of drinking water pumping station, drainage

station and other utility services to non-peak hours through TOD and other

Demand Side Management strategy.

8.9 In the notes of Financial statement of Annual Accounts of 2014-15 and onward or

through Auditor’s Certificate, the following information is to be provided by DPL in

a manner as described below:

i) All the expenditure or cost element considered under tariff applications are

to be provided separately for distribution function and generation function

for the regulatory requirement.

ii) The penalty, fine and compensation under Electricity Act 2003 shall also be

shown separately for distribution function and generation function.

iii) Any fine, penalty or compensation in any other statute other than Electricity

Act 2003 shall be mentioned separately for distribution function and

generation function along with the reference of the statute.



iv) The figure of AT & C loss for the years concerned in line with the

computation methodology as specified in Form 1.8 of the Tariff Regulations

is to be provided. Beside that AT&C loss calculated with arrear recovery

done for the period prior to the year for which the account is prepared shall

also be shown separately.

In case of non submission of the above documents/ information the application of

APR will not be admitted.

8.10 While submitting APR application of any ensuing year DPL shall submit the

certificate from the statutory auditor of the annual accounts of the said year for

the following parameters.

i) Based on fixed asset register the parameters to be submitted are

a) The distribution line length and transmission line (if any which is

essential part of distribution system as per section 2(72) of Electricity

Act 2003) length in CKM for each level of Voltage related to the assets

of DPL. For the asset which is not owned by the DPL but maintained

by DPL shall be shown separately.

b) Similarly the number of transformers and total installed capacity of

transformers in MVA or KVA for each category of transformers for

distribution system are to be provided.

ii) For the year concerned under the APR the actual number of Consumer, the

consumption level in MU and total connected load in KVA for each category

of consumers on whom the tariff rate has been issued in the tariff order of

the year corresponding to the APR under consideration.



iii) List of expenditure arises on account of penalty, fine and compensation due

to non-compliance of any statute or statutory order along with the reasons

for each such type of penalty, fine and compensation.

iv) Copies of the audited accounts of all the terminal benefit funds for the year

for which APR is under consideration in a complete shape and not by any

selective pages.

v) A statement showing monthly deposition in different terminal benefit funds

for the year for which APR is under consideration in persuasion to the

direction given in paragraph 8.13. A detail breakup showing total

expenditure and employee strength against each level of all categories of

employees including the whole time directors of the board. If any director

or employee discharge any function of other companies also then the

allocation of cost among the companies shall be shown separately and

distinctly against each level below.

vi) In pursuance to regulation 5.8.1(vi) of Tariff Regulations the licensee/

generating Company shall submit the total demurrage hour and related

demurrage charges paid against total no. of rakes for each generating

station for the year concerned along with the APR/ FPPCA application of

every ensuing year which shall be certified by the auditors.

vii) Henceforth with the application of APR, DPL shall also enclose their

compliance report on Renewable Purchase Obligation power in pursuance

to clause 8 of the West Bengal Electricity Regulatory Commission

(Cogeneration and Generation of Electricity from Renewable Sources of

Energy) Regulations, 2013 or any of its subsequent amendment or

replacement in future.



In case of non-submission of the above documents, the application of APR will

not be admitted.

8.11 In case of expenditure at a level higher than the admitted amount under any

uncontrollable factor in this tariff order on account of fixed charges, while

submitting APR application of any ensuing year DPL has to justify in detail with

supporting documents and evidence on the basis of which the Commission will

take its decision during truing up exercise and it may be noted that without

sufficient justification the excess expenditure may not be admitted in the APR

fully or partly. Similarly for controllable factors, where applicable as per the Tariff

Regulations, for the same reasons supporting documents and evidence is to be

submitted to justify their claim. While truing up any uncontrollable factor on

account of fixed charges, the actual business volume parameter (Distribution line

length or consumer strength) and actual inflation rate to which such

uncontrollable item is sensitive will be considered in the same manner and

principle as determined under the tariff order subject to the limitation as per the

Tariff Regulations. However, where applicable as per this tariff order the ratio of

expenses increase in % on any item and the sensitivity parameter increase will

remain the same as that of this tariff order.

8.12 While submitting application for APR of 2014-15 and onwards by any licensee, if

such application shows any net claim for that year after considering the

concerned FPPCA, then in such case the licensee shall suggest in specific terms

the ensuing year(s) in which they intend to recover such claim and by what

amount. Licensee shall also show the consequential impact of such recovery in

the expected average cost of supply in those ensuing years after considering the

total revenue recoverable through the tariff. The total revenue recoverable

through the tariff means the summated amount of the Net Aggregate Revenue

Requirement plus all other amount on account of any release of regulatory asset,

FPPCA and APR for any year which is being already decided by the Commission



in earlier orders. They shall also mention the carrying cost if necessary where it

is applicable in terms of the Tariff Regulations and different orders and direction

in this respect. Above mentioned consequential impact on tariff of ensuing years

shall also be provided in the gist of the APR application.

In case of non submission of the above information the application of APR will

not be admitted.

8.13 In order to ensure that in future actuarial valuation of terminal benefit fund can be

kept in control in a better way by avoiding carrying cost of such liability in future

following is to be adhered.

i) DPL shall ensure that henceforth the amount that is statutorily required to

be deposited in a month in different fund on account of terminal benefit, as

a part of employee cost admitted in the tariff order, is to be deposited in

different terminal benefit funds every month as a first charge item.

ii) On the head of terminal benefit fund, if there is shortage in the deposit

amount in the terminal benefit fund admitted in employee cost through this

order, the balance amount of contribution to terminal benefit fund is

required to be deposited as first charge item over and above what had

already been deposited for the year 2014-15, from the effective date of

recovery of the recoverable amount against this order from the very first

day. So, it is directed that the balance amount of contribution as discussed

above to terminal benefit fund for the year 2014-15, i.e., the difference

between the amount of contribution to terminal benefit funds as allowed in

this order as a part of employee cost and that has already been deposited

in the fund for the year 2014-15, is to be deposited in the respective

different terminal benefit funds. Such balance amount is to be deposited in



different terminal benefit funds in 12 monthly equal installments from the

date on which the recovery through tariff against this order will start.

iii) While submitting application for APR of 2014 – 2015 , 2015-16 and 2016-

17, DPL shall show through audited accounts of different terminal benefit

funds that the contribution to the different terminal benefit funds during the

concerned year as a part of employee cost is deposited in the terminal

benefit funds.

In case of non-deposition of amount admitted for terminal benefit fund as

provided in (a) to (c) above in the respective fund as directed above, Commission

may withhold or deduct same amount equivalent to amount of non-deposition.

8.14 DPL shall purchase short term power from WBSEDCL if it is found to be

comparable with the short-term market or less. If it is day ahead basis

procurement then such comparable rate will be that of exchange if WBSEDCL

agreed so. Otherwise procurement shall be done from exchange if it is available

in the exchange. In case of weak-ahead purchase corresponding market

segment of exchange shall be the benchmark for comparability. For procurement

above seven days tender shall be done. However, if through a long term PPA the

short term requirement is met from WBSEDCL based on a principle that will

ensure comparable price with market then such can be done subject to the

condition that such PPA is being approved by the Commission.

8.15 DPL shall submit the project cost in respect of unit VII within 30.06.2015. It is to

be noted that the deductable amount for last few years are cumulatively piling up

and in future on compliance of the Commission’s direction on project cost in

pursuance to regulation 2.8.1.4.12 of Tariff Regulations, Commission will come

out with a approved project completion cost on the basis of which the admissible

amount payable for the past years since 2008-09 will be released in at least



equal number of years and no carrying cost will be provided for that purpose as

DPL is delaying in submission of the finalized project completion cost.

The COD of unit VIII of DPL has been declared as 01.10.2014. In terms of

regulation 2.8.1.4.10 of the Tariff Regulations the performance guarantee test is

to be completed within four months from the date of synchronization and on

completion of performance guarantee test for the unit, detailed results along with

the related documents of such tests are to be submitted along with the next tariff

application or next APR application whichever is earlier. DPL is directed to

conduct the performance guarantee tests, if not yet done, immediately and

submit the details of the performance guarantee tests as per provisions of the

regulations 2.8.1.4.10 of the Tariff Regulations along with their APR application

for 2014 – 2015 failing which 15% of the permitted return will be withheld as per

provisions of the Tariff Regulations.

8.16 All the distribution licensees and generating companies shall follow regulation

5.6.5.1 of the Tariff Regulations in its true spirit. According to regulation 5.6.5.1 of

the Tariff Regulations the interest on working capital requirement of a generating

company or a licensee shall be assessed on normative basis @ 18% on a base

amount derived by summation of annual fixed charges, fuel cost and power

purchase cost reduced by certain elements of the ARR. It has also been

mentioned there that where Monthly Fuel Cost Adjustment (MFCA) or Monthly

Variable Cost Adjustment (MVCA) exists, in that case for interest on working

capital requirement the above normative basis shall be 10% instead of 18% on

the said base amount. In this context it may be noted by all stakeholders that any

distribution licensee or generating company on which collection of MFCA and

MVCA, as the case may be, is applicable as per Tariff Regulations, shall not be

entitled to claim interest on the above referred normative basis of 18% even on

the plea of not claiming MFCA or MVCA throughout any financial year.



8.17 Every day by 11.30 a.m. DPL shall upload its initial drawal schedule as per the

format under Annexure – IV and also initial injection schedule (i.e., schedule of

Actual Declared Capacity and Notional Declared Capacity) in accordance with

the prevailing State Grid Code framed by WBERC for the next day in their

website. If necessary, for proper representation of the schedule in the website

the format can be altered with approval of the Commission. This schedule shall

be kept in the website till the next two months after the date of the order of the

APR or FPPCA whichever is later in relation to the year concerned to the day

under discussion. The website design shall be such so that the schedule of any

date can be easily fetched. This facility is to be made operational from 1st of April,

2015. DPL is also directed to upload such schedule of every day from 1st April,

2014 to 31st March 2015 within 1st

8.18 The Commission is statutorily duty bound to promote generation of electricity

from following sources of energy:

June 2015. This direction has been issued for

sake of transparency and to protect the interest of all the stakeholders in large.

i) Co-generation of electricity from renewable sources.

ii) Co-generation of electricity from fossil fuel sources.

iii) Co-generation of electricity from hybrid sources of fossil fuel /

conventional sources and renewable sources.

iv) Electricity generation from renewable sources.

In order to promote above mentioned type of generation of electricity by applying

regulations 8.3 and 8.4 of the Tariff Regulations and regulations 19.1 and 19.2 of

the West Bengal Electricity Regulatory Commission (Cogeneration and

Generation of Electricity from Renewable Sources of Energy) Regulations, 2013,

the Commission decides that from the APR of the ensuing year 2016 – 2017 a



deduction of 5% from Return on Equity will be done if DPL fails to comply with

the Renewable Purchase Obligation as per West Bengal Electricity Regulatory

Commission (Cogeneration and Generation of Electricity from Renewable

Sources of Energy) Regulations, 2013 or any of its subsequent amendment. In

this context, the Commission also directs that henceforth DPL shall advertise on

important national media inviting the interested parties of supplying renewable

and cogeneration electricity on every fourth months for next two years instead of

one time in a year in pursuance to the regulation 3.5 of the said Regulations

8.19 Henceforth, any application for Power Purchase Agreement (PPA), except for

short term PPA meaning PPA for a period not exceeding one year, submitted by

any licensee to the Commission for approval of the PPA shall go through the

process of inviting suggestions and objections from all stakeholders through at

least three well circulated newspaper publication for consideration of the

Commission of all such suggestions and objections as a process of the approval

procedure and subsequent to such approval only, the PPA can be executed by

the licensee and the seller of the power. For this purpose, while submitting the

said PPA the licensee shall also give a draft gist for newspaper publication for

approval of the Commission. On getting approval of the Commission such gist

shall be published in the newspapers within 5 working days. Such gist shall also

be posted in the website along with the application and PPA from the date of gist

publication to at least the last date of submission of suggestions and objections

as will be mentioned in the gist. The gist shall cover the name of seller of the

power, type of specific source (such as coal, gas, hydro, solar, etc.), major

important parameters that are required under the Tariff Regulations for such

purchase and the important points of the purpose of such procurement. The

application submitted shall have the above points of the gist along with detailed

justification of such proposed procurement along with all the information and

parameters that are required under the Tariff Regulations or Regulations of the



Commission related to renewable and cogeneration sources of energy. The

application shall also clearly spell that how the interest of the consumer as well

as of the licensee has been safeguarded in the PPA. The application without

such gist and the points as mentioned shall not be admitted. This process is

done in order to meet the end of justice after keeping consistency with the

Electricity Act, 2003.

Sd/- SUJIT DASGUPTA

MEMBER

DATE: 04.03.2015

Corrigendum to the Tariff Order dated 04.03.2015 of the ... · 1.2 The Durgapur Projects Limited...

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